Exhibit 99.1

Norstan Appeals USAC Decision


     MINNEAPOLIS--(BUSINESS WIRE)--June 1, 2004--Norstan, Inc.
(Nasdaq:NRRD), a leading provider of communications solutions and
services, today reported that in April 2004, the company received a
Commitment Adjustment Letter from the Universal Services
Administrative Company (USAC), which oversees the Federal
Communications Commission's School and Libraries Program of the
Universal Service Fund, called the "E-rate program." Funding
commitments under the E-rate program provide for discounts on eligible
services such as telecommunications services, internet access, network
equipment and wiring of instructional buildings and classrooms to
connect to the Internet.
     The letter informed Norstan that USAC had undertaken an audit of
the Navajo Preparatory School (Navajo Prep) project for funding year
2001, in which Norstan had installed specific equipment and services
for which the company received approximately $2.2 million. The audit
report concluded that Navajo Prep had not complied with key
requirements of the E-rate program and, consistent with E-rate
policies, USAC is seeking recovery of the full amount disbursed to
Norstan on behalf of Navajo Prep. Norstan has filed an appeal with
USAC and is continuing its investigation of the Navajo Prep project.
     While Norstan will continue to defend and appeal USAC's decision,
the company may be required to repay a portion or all of the $2.2
million. Therefore, in accordance with generally accepted accounting
principles, the company has established a reserve of $2.2 million in
the fourth quarter of fiscal 2004 pertaining to this disputed funding
claim. This reserve is in addition to the already reported fourth
quarter fiscal 2004 restructuring charge of $6.0 - $8.0 million.
     Norstan will report fourth quarter fiscal 2004 results on June 17,
2004 after the market close.

     About Norstan, Inc.

     Norstan, Inc. (Nasdaq:NRRD) - A full-service communications
solutions and services company delivering voice and data technologies
and services, and remanufactured equipment to corporate end-users,
channel partners and public sector companies. Norstan also offers a
full range of technologies for customer contact solutions, voice and
convergence, messaging, infrastructure, conferencing and mobility.
Norstan has offices throughout the United States and Canada. To learn
more, visit the Norstan website at www.norstan.com.

     Cautionary Statement Under the Private Securities Litigation
Reform Act of 1995

     This release contains forward-looking statements within the
meaning of the Private Securities Litigation Acts of 1995. A number of
factors should be considered in conjunction with the above
forward-looking statements, including changes in economic and market
conditions, factors related to the development of new technologies,
product pricing, labor costs, industry regulation, management of
growth, integration of acquisitions, access to adequate financing and
other factors set forth in cautionary statements included in Norstan's
Form 10-K and other documents as filed with the Securities and
Exchange Commission. Readers are cautioned not to place undue reliance
on forward-looking statements, which reflect management's analysis
only as of the date of this release. The company undertakes no
obligation to update these forward-looking statements to reflect
events and circumstances that may arise after the date of this
release. Disclosure of revenue dollars are not intended to reflect
materiality, and are subject to confidentiality provisions and
customer consent.

     Form 8-K Filing

     Concurrent with this new release, Norstan filed a Form 8-K with
the Securities and Exchange Commission (SEC) as required by Item 5 of
the instructions for Form 8-K. This Form 8-K is available on Norstan's
Investor Relations web site and on the SEC's web site.

     Norstan and associated product names are trademarks or registered
trademarks of Norstan, Inc. in the United States and/or other
countries. All other products and services mentioned in this document
may be trademarks of the companies with which they are associated.

    CONTACT: Norstan, Inc., Minneapolis
             Jan W. Drymon, 952-352-4292
             jan.drymon@norstan.com