Stillwater school board settles suit with former finance director

The Stillwater school district and its former board chair have settled a lawsuit filed by its former director of finance and operations, Kristen Hoheisel, agreeing to pay her $475,000 in lost wages, damages and attorneys fees more than two years after she was fired. The payment will be covered by the district's insurer.

The settlement includes a job recommendation for Hoheisel from Stillwater Superintendent Michael Funk as well as a statement from the current board saying they believe Hoheisel was performing her job adequately and should not have been terminated.

"The [board] statement was very important to me," Hoheisel said Friday. "The entire case was never about money to me. It was more along the lines of trying to not only clear my name but salvage what I could of a reputation that had been destroyed."

Hoheisel was director of finance and operations for Stillwater Area Public Schools at a time of political turmoil, much of it the fallout from a 2016 district decision to close three schools in the northern portion of the district in order to fund needs in the rapidly growing southern portion, including Lake Elmo and Woodbury.

The decision brought condemnations from residents who had earlier supported a bond referendum that they thought would boost the shuttered schools, and for years afterward a sense of betrayal was evident in elections and social media commentary. A group of parents calling themselves 834 Voice unsuccessfully sued the district, alleging among other things that Hoheisel and her husband had undisclosed conflicts of interest. A district court judge later dismissed those claims.

Hoheisel, speaking Friday, said she believes now that the school closures drove a movement to exact revenge on the district, and her high profile position was drawn into the political morass. "I've never viewed it as a political position, but I recognize that it is," she said.

Hoheisel filed a hostile work environment complaint in 2017, saying she was subject to gender discrimination and harassment by two members of the school board. Hoheisel alleged in her suit that a third-party investigator found merit to the complaint but that the board took no action. Hoheisel then filed a second complaint in 2020, and about a month later was placed on paid administrative leave.

The suit alleged that former school board member Sarah Stivland violated the state's open meetings law by, among other things, not putting the board into closed session during preliminary consideration of allegations against Hoheisel. It also said Hoheisel was placed on administrative leave shortly after reporting a hostile work environment, a violation of the state's whistleblower statute. The suit also said the board was careless in discussions about an investigation of a district employee to the point that the public would recognize that employee as Hoheisel, a violation of the state's government data protection act.

Four months after Hoheisel filed the lawsuit, the school board voted 4-1 in closed session to fire her.

The settlement, which was announced Monday in a special meeting of the Stillwater School Board, included a statement from the current board members that said Hoheisel's termination occurred "in the midst of ongoing political turmoil."

"The current school board believes that Ms. Hoheisel was performing her job duties adequately in the midst of a difficult political environment for employees and does not support the employment actions taken by that board," the statement read.

Hoheisel's lawsuit had been scheduled for a pre-trial hearing on Friday before the settlement was announced.