STATE OF MINNESOTA

                                  IN SUPREME COURT

                                       A23-0064


Court of Appeals                                                             McKeig, J.
                                                                  Took no part, Gaïtas, J.
Minnesota Internship Center,

                    Appellant,

vs.                                                               Filed: August 7, 2024
                                                              Office of Appellate Courts
Minnesota Department of Education,

                    Respondent.

                               ________________________

Jack Y. Perry, Brayanna J. Smith, Taft Stettinius & Hollister LLP, Minneapolis,
Minnesota; and

John Cairns, John Cairns Law, P.A., Minneapolis, Minnesota, for appellant.

Keith Ellison, Attorney General, Peter J. Farrell, Deputy Solicitor General, Alec Sloan,
Assistant Attorney General, Saint Paul, Minnesota, for respondent.
                             ________________________

SYLLABUS

      When fraudulent activity is alleged against a school district or charter school, the

Commissioner of the Minnesota Department of Education has the statutory authority to

audit the aid appropriations distributed to school districts or charter schools under

Minnesota Statutes section 127A.41 (2022) and is not required to investigate under

Minnesota Statutes section 127A.42 (2022).

      Affirmed.


                                             1

OPINION

MCKEIG, Justice.

       This appeal requires us to determine whether, when the Minnesota Commissioner

of Education (the Commissioner) receives a complaint that a school has intentionally

misreported its enrollment numbers, the Commissioner must investigate the school under

a statute which deals with violations of law, rather than a statute that allows for audits to

correct for funding disparities. Respondent the Minnesota Department of Education (the

Department) supervises the distribution of state aid to schools and accordingly has the

power to select schools for audits, audit those schools, and adjust state aid if an audit shows

an over- or underpayment. Appellant the Minnesota Internship Center (the School) is a

charter school and was the subject of a citizen complaint alleging that it manipulated

attendance records—a practice which could have resulted in overpayments in aid to the

School. Based on the complaint and a subsequent assessment, the Department audited the

School. As a result of the audit, the Department retroactively decreased the aid to the

School by over $1.3 million.

       The School appealed administratively to the Department and the decision was

affirmed. The School then appealed to the court of appeals, arguing that the Department

conducted the audit under the wrong statute—Minnesota Statutes section 127A.41

(2022)—which deals with adjustments to aid distributions. The School claimed that it

should have been investigated under the statute that deals with a continuing violation of

law—Minnesota Statutes section 127A.42 (2022). The court of appeals affirmed. Because




                                              2
the Commissioner had the legal authority to conduct an audit under section 127A.41, we

affirm.

                                            FACTS

          The Department has been tasked by the Legislature with distributing state aid to

school districts or charter schools. See Minn. Stat. §§ 127A.40 (2022), 127A.41, subd. 1.

This distribution includes “general education revenue” and “compensatory education

revenue.” See Minn. Stat. § 126C.10, subds. 1 and 3 (2022) (defining “general education

revenue” and “compensatory education revenue,” respectively). An integral component of

the calculation of general education revenue is the number of “adjusted pupil units” for the

school year. See generally Minn. Stat. § 126C.10 (2022). These adjusted pupil units

depend on the “average daily membership” of the district or charter school, which is the

mean of the number of students enrolled in a district or charter school each school day

during the school year. See Minn. Stat. § 126C.05, subds. 1, 5, 8(a) (2022). A student is

enrolled in a district or charter school until the date of their withdrawal, and a student who

is absent for 15 consecutive days is considered withdrawn. Id. at subd. 8(a). By contrast,

compensatory education revenue is calculated, in part, by accounting for the number of

enrolled students who are eligible for free or reduced-price lunch. See Minn. Stat. §§

126C.05, subd. 3 (2022), 126C.10, subd. 3.

          In addition to distributing funds, the Department must also audit the pupil counts of

at least 25 school districts or charter schools per year to ensure financial accountability.

Minn. Stat. § 127A.41, subd. 3. The Department is authorized by the Legislature to create

the procedures both for conducting the audits and for selecting which districts or charter


                                                3
schools are to be audited. Id. Accordingly, the Department created the Minnesota

Department of Education Procedures for Conducting District Audits and Audit Appeals. 1

This document states that the Department’s audit selection procedure considers, among

other factors, randomicity, requests from Department employees, follow-up audits based

on previous findings, and “audits selected through requests submitted by districts, citizens,

etc.” Further, the audit selection criterion for citizen requests states that “[a]ll requests are

given a preliminary assessment in which [the Department] gathers background information

and evaluates the information/evidence provided by the complainant.”

       The School reported an average daily membership of 520.98 for fiscal year 2018. 2

Based on that number, the School reported the number of students eligible for free or

reduced price lunch as 485 for fiscal year 2019. 3 In September 2018, the Department

received two citizen complaints, one against the School and one against its authorizer. 4

The complaints alleged that the School had “engaged in activities that potentially violate




1
      See Minn. Dep’t. of Educ. Procs. for Conducting Dist. Audits and Audit Appeals
(Revised Aug. 14, 2017).
2
       Fiscal year 2018 covers the 2017-2018 school year. Likewise, fiscal year 2019
covers the 2018-2019 school year.
3
      This number is based on the number of students enrolled on October 1 of the
previous school year. See Minn. Stat. § 126C.05, subd. 3 (2022).
4
       An “authorizer” is one of a statutorily enumerated list of organizations that may
“authorize one or more charter schools.” Minn. Stat. § 124E.05, subd. 1 (2022). Among
other things, an “authorizer” must oversee “the fiscal and student performance of the
charter school.” Minn. Stat. § 124E.06, subd. 4 (2022).

                                               4
both state and federal law.” The complaint against the School alleged, among 10 other

claims, that

       The school engaged in fraudulent attendance practices, wherein they did not
       drop many students after 15 consecutive days of absence. This was done
       solely for financial benefit. The authorizer has known that the school has
       “warehoused” students before, but the practice was never this egregious. . . .
       Employees are directed to NOT drop students after 15 days absence.


The Department notified the School’s authorizer, and the authorizer requested that the

School respond to the allegations.        The School acknowledged that its previous

administration had fabricated student attendance records in prior years but claimed to have

made all necessary corrections for the 2018-2019 school year.

       Based on the citizen complaints, the Department selected the School as one of its

25 mandated audits for the year. The audit began in March 2019 with an entrance interview

with administrators from the School. At this meeting, the School explained to the audit

team that there were two types of attendance records—electronic attendance records and

manual sign-in sheets—and that all students were required to sign in on the manual sheets.

The School provided the audit team with both types of attendance records. Through

examination of these records, the audit team discovered several discrepancies between the

manual and the electronic attendance records, and “the auditors determined that the

electronic attendance records were not a sufficient, complete, or reliable form of

documentation.” Consequently, the auditors used the manual attendance records—the

source documents from which the electronic attendance records were taken—to verify and

cross-check the School’s previously reported attendance.



                                             5
       In October of 2021, the audit was complete, and its results were shared with the

School. The audit found nine types of reporting inaccuracies related to general education

revenue resulting in a net decrease in average daily membership of 137.28, with a

recommended downward adjustment in general education revenue of $868,793.11. The

audit also found six types of reporting inaccuracies related to compensatory revenue

resulting in a net decrease in enrolled students eligible for free lunch of 131, with a

recommended downward adjustment in compensatory revenue of $487,753.76. The total

recommended adjustment resulted in an overall decrease of $1,356,546.87, which the

Commissioner accepted.

       The School appealed the results of the audit administratively and offered its own,

much lower estimate for the decrease in aid, but the results of the audit were upheld. 5 The

School then appealed to the court of appeals. The School argued, in part, that because the

allegations involved a potential violation of law, the Department could audit the School

only under a statute that related to violations of law. 6 Minn. Internship Ctr. v. Minn. Dep’t




5
       The audit team acknowledged it had made one error due to a student who used a
different name for manual sign-in than the name reported in the year-end data. The appeals
committee corrected that error by accepting the School’s appeal as it related to that one
student.
6
       The School also claimed at the court of appeals that 1) section 127A.41—the statute
authorizing pupil count and aid audits—does not apply to charter schools; and 2) the
Commissioner’s decision was arbitrary and not supported by substantial evidence. Minn.
Internship Ctr. v. Minn. Dep’t of Educ., 

, 40 (Minn. App. 2023). The court
of appeals rejected these arguments and the School did not seek further review of these
issues. 

. Therefore, these issues are not before this court.

                                              6
of Educ., 

, 40 (Minn. App. 2023). The court of appeals affirmed the

Commissioner’s decision in all respects. 

.

       The School petitioned this court for further review of one issue—whether the

Department was required to proceed under the statute related to violations of law, Minn.

Stat. § 127A.42, instead of the statute that requires the Department to perform 25 pupil

count and aid entitlement audits per year, Minn. Stat. § 127A.41. We granted review.

                                        ANALYSIS

       The Department is an administrative body, and the Commissioner’s decision here is

a quasi-judicial agency decision. “[J]udicial review of the quasi-judicial decisions of

administrative bodies is limited to review by certiorari, in which the court’s inspection of

the record is necessarily confined to questions affecting the jurisdiction of the board, the

regularity of its proceedings, and, as to merits of the controversy, whether the order or

determination in a particular case was . . . under an erroneous theory of law . . . .” Jackson

v. Comm’r of Hum. Servs., 

, 413 (Minn. 2019) (citing Dietz v. Dodge Cnty.,

 (Minn. 1992) (internal quotation marks omitted). Here, the School

challenges whether the Department had the statutory authority to investigate the School’s

attendance reporting under the pupil count and aid entitlement audit procedure, or whether

the Department was instead required to investigate the alleged reporting errors as a

violation of law. This issue turns on whether an agency exceeded its statutory authority

and is a matter of statutory interpretation. Such a “question is one of law that we review

de novo.” Save Lake Calhoun v. Strommen, 

, 176 (Minn. 2020).




                                              7
       Minnesota Statutes section 127A.41 concerns the distribution of school aid and is

the statute under which the Department audited the School. Under section 127A.41,

subdivision 1, the Commissioner is tasked with the supervision of “distribution of school

aids and grants in accordance with law.”           The next subdivision concerns errors in

distribution and provides that, “[o]n determining that the amount of state aid distributed to

a school district is in error, the commissioner is authorized to adjust the amount of aid”

given to the school and may “recover the amount of the excess by any appropriate means,”

including “reducing future aid payments to the district.” 

 at subd. 2 (emphasis added).

       The statute also describes an audit process, stating:

       The commissioner shall establish procedures for conducting and shall
       conduct audits of district records and files for the purpose of verifying district
       pupil counts, levy limitations, and aid entitlements. The commissioner shall
       establish procedures for selecting and shall select districts to be audited.
       Disparities, if any, between pupil counts, levy limitations, or aid entitlements
       determined by audit of district records and files and data reported by districts
       in reports, claims and other documents shall be reviewed by the
       commissioner who shall order increases or decreases accordingly.
       Whenever possible, the commissioner shall audit at least 25 districts each
       year pursuant to this subdivision. Procedures adopted under this subdivision
       . . . may differ from the procedures under section 127A.42.

 at subd. 3 (emphasis added). Stated more plainly, under section 127A.41’s audit

process, the Commissioner must 1) select and audit at least 25 districts or charter schools

each year to verify accurate pupil counts; 2) order increases or decreases to aid entitlement

in cases of inaccurate pupil counts; and 3) recover any excess funds allocated to a school

by any appropriate means.

       Minnesota Statutes section 127A.42, on the other hand, concerns reductions in aid

for violations of law. Subdivision 2 specifically covers violations of law and provides:


                                               8
       The commissioner may reduce or withhold the district’s state aid for any
       school year whenever the board of the district authorizes or permits
       violations of law within the district by:
       (1)    employing a teacher who does not hold a valid teaching license or
              permit in a public school;
       (2)    noncompliance with a mandatory rule of general application
              promulgated by the commissioner in accordance with statute, unless
              special circumstances make enforcement inequitable, impose an
              extraordinary hardship on the district, or the rule is contrary to the
              district’s best interests;
       (3)    the district’s continued performance of a contract made for the rental
              of rooms or buildings for school purposes or for the rental of any
              facility owned or operated by or under the direction of any private
              organization, if the contract has been disapproved, the time for review
              of the determination of disapproval has expired, and no proceeding
              for review is pending;
       (4)    any practice which is a violation of sections 1 and 2 of article 13 of
              the Constitution of the state of Minnesota;
       (5)    failure to reasonably provide for a resident pupil’s school attendance
              under Minnesota Statutes;
       (6)    noncompliance with state laws prohibiting discrimination because of
              race, color, creed, religion, national origin, sex, age, marital status,
              status with regard to public assistance or disability, as defined in
              sections 363A.08 to 363A.19 and 363A.28, subdivision 10; or
       (7)    using funds contrary to the statutory purpose of the funds.

 at subd. 2 (emphasis added). This section requires that the Commissioner notify the

board of the district of a violation and allows the board to dispute the alleged violation

and/or correct the violation to avoid any aid reduction or withholding. 

 at subds. 4–6.

       “The object of all interpretation and construction of laws is to ascertain and

effectuate the intention of the legislature.” 

 (2022). “[W]ords and

phrases are construed according to rules of grammar and according to their common and

approved usage.” 

(1) (2022). “If the Legislature’s intent is clear from

the statute’s plain and unambiguous language, then we interpret the statute according to its




                                             9
plain meaning.” State v. Cummings, 2 N.W.3d 528, 533 (Minn. 2024) (quotation marks

omitted) (citation omitted).

       The School claims that because the alleged fraudulent attendance activity of the

former administration is arguably a crime, this “triggered” an investigation under section

127A.42 and precludes an investigation by audit under section 127A.41. Beginning our

analysis with section 127A.42, that section provides that the Commissioner may reduce or

withhold the district’s state aid for certain violations of law. Despite the claim that the

alleged violation of law “triggered” an investigation under section 127A.42, the School

does not direct us to any “triggering” language in this section, nor do we find any. Further,

there is no language in section 127A.42 that forecloses an investigatory audit under section

127A.41.     Thus, irrespective of whether the Department could have pursued an

investigation under section 127A.42, there is nothing in that section mandating or

automatically triggering that the Department do so.

       The sole remaining question is then whether there is anything in the language of

section 127A.41 precluding the Department from using the audit procedure as a means of

investigation. Here too, the School does not direct us to any “triggering” language, instead

seeming to suggest that the Department’s audit under section 127A.41 was improper

because it did not conform to the procedures laid out in section 127A.42. But the language

regarding audits in section 127A.41 suggests the contrary. Explicitly, section 127A.41,

subdivision 3, provides that the “[p]rocedures adopted under this subdivision . . . may differ

from the procedures under section 127A.42.” (Emphasis added.)




                                             10
       The School, for its part, also argues that section 127A.41, in subdivision 2, allows

only for aid adjustments due to “errors,” and that “errors” include only unintentional acts.

See Minn. Stat. § 127A.41, subd. 2. The School relies on the Merriam-Webster online

dictionary’s definition of “error” to mean “an act involving an unintentional deviation from

truth or accuracy,” or “a mistake . . . .” Error, https://www.merriam-webster.com (last

visited July 31, 2024). 7 Because fraudulent attendance reporting undertaken for financial

gain is an intentional act, the School claims such an act could not be considered an “error.”

       This argument is unpersuasive. The School’s chosen definition—read according to

the rules of grammar—does not support its argument. The relevant statutory language

relied upon by the School as allowing the Commissioner to adjust state aid reads: “On

determining that the amount of state aid distributed to a school district is in error . . . .”

Minn. Stat. § 127A.41, subd. 2 (emphasis added). The root verb here—distribute—is the

action that would have resulted in any “error.” The entity distributing state aid to a district

or charter school is not the School itself, but rather the Department. Nothing in the record

suggests that the Department was aware of the School’s fraudulent attendance practices

before the citizen complaint, so any deviation from accurate distribution would have been

unintentionally done by the Department. The mere fact that the School’s misreporting




7
       The School’s offered definition is consistent with commonly used print dictionaries.
See, e.g., Error, The American Heritage Dictionary of the English Language 605 (5th ed.
2018) (defining “error” as “[a]n act, assertion, or belief that unintentionally deviates from
what is correct, right, or true,” or “[a] mistake”).


                                              11
caused the Department to make the error does not transform it from an unintentional into

an intentional deviation from truth or accuracy. 8

       The School also cites to two different cases as persuasive authority to support its

argument. The first, In the Matter of the Petition for Review of the Minn. Dep’t of

Education’s Procedure Regarding Audit Report Appeals, OAH 5-1300-33879, 

 (Minn. OAH Dec. 7, 2016), involved a charter school that was investigated under

section 127A.41 after allegations that the school had violated federal regulations. But

rather than addressing whether the Department had the authority to audit the school under

section 127A.41 as is the issue here, that case involved whether the Department’s appeal

procedure adhered to the requirements of the Minnesota Administrative Procedure Act. Id.

at *7. Not only is that decision irrelevant to the issue before us today, but the Legislature

changed the language at issue in that case during the very next legislative session, making

the ruling entirely immaterial to the statutory scheme at issue in this case. See Act of May

30, 2017, ch. 5, art. 1, § 15, 2017 Minn. Laws 1st Spec. Sess. 1, 10.

       The second case, United States v. Minnesota Transitions Charter School,

 (D. Minn. 2014), involved allegations of fraudulent attendance



8
       The School also seems to suggest that fraudulent attendance practices cannot be
considered a “[d]isparit[y]” for purposes of the audit process described in section 127A.41,
subdivision 3, though it offers no arguments or analysis to support this assertion.
“Disparity” is defined as “[t]he condition or fact of being unequal . . . ” or “[u]nlikeness;
incongruity.” Disparity, The American Heritage Dictionary of the English Language 520
(5th ed. 2018). Because the reported attendance numbers were unequal, unalike, and
incongruous with the attendance numbers as determined by the audit team, there existed a
clear “[d]isparit[y] . . . between pupil counts,” allowing the Commissioner to “order . . .
decreases accordingly.” Minn. Stat. § 127A.41, subd. 3.

                                             12
practices against a charter school, similar to the case before us. But that is where the

similarities end. Not only was the Department not a party to the action in Transitions,

neither of the statutes at issue here were involved in that case. See id. Ultimately, the cited

case law is unpersuasive, and the School has failed to show that the Department lacked the

statutory authority to perform its audit under section 127A.41. Further, nothing in the plain

language of either sections 127A.41 or 127A.42 suggests that the Department must

investigate only under section 127A.42 if there are allegations of illegal behavior.

       For its part, the Department argues that “the [C]ommissioner has complied with the

legislative mandate in section 127A.41 and established procedures for selecting districts

and charter schools for audits,” and we agree. By its plain language, the only reasonable

reading of section 127A.41 allows the Commissioner to have established the procedures

by which the School was selected for an audit, and furthermore allows for the subsequent

audit of the School and the consequent reduction in aid.

       Accordingly, we conclude that the Department had the authority to audit the School

under section 127A.41 and was not required to investigate under section 127A.42, despite

the allegations of fraudulent activity.

                                      CONCLUSION

       For the foregoing reasons, we affirm the decision of the court of appeals.

       Affirmed.




                                              13
       GAЇTAS, J., not having been a member of this court at the time of submission, took

no part in the consideration or decision of this case.




                                             14