Number 13. December 21, 1976

Number 13. December 21, 1976 rhaddeus Buczko State Auditor State House Boston, Massachusetts 02133 Dear Mr. Buczko: The Commissioner of Public Welfare and the Commissioner of Educa- :ion has requested the state auditor to audit grants and contracts from the Departments of Public Welfare and Education to the Elma Lewis School Df Fine Arts (ELSFA) for fiscal year 1976. In entering into these grants md contracts, the ELSFA, a non-profit corporation, agreed in writing :o permit audits of its use of the funds, and has co-operated with the state auditor in the auditing procedure that is the subject of your opinion *equest. 3A recent holding of the Supreme Judicial Court, City of Boston v. Massachusetts Port Authority, 364 Mass. 639 (1974), while distinguishable from this situation, is nonetheless instructive in suggest- ing limits on the exempting language of c. 75, §3. There, the Court held that air pollution regulations promulgated by the State Department of Public Health were binding on the Port Authority, despite language in its statutory charter, St. 1965, c. 465, §2, providing a broad exemption from "supervision or regulation of... any department, commission, board, bureau or agency of the commonwealth..." The Authority suggested, inter alia, that the basis for the §2 exemption was to permit it to operate essentially as a private business rather than a state agency. Accordingly, the Court reasoned that since air pollution regulations applied to all entities, public and private, there was not basis for applying the exemption in that instance. The Court then stated that to conclude otherwise would mean "that no legislation authorizing state regulation of any activity or subject, regardless of the breadth of its language and the generality of its application, would supersede such exemption except by express reference to and amendment of the enabling act . . ." 364 Mass. at 655. Thus, if the general statute involved were applicable to private as well as governmental bodies, as was the case in City of Boston v. M.P.A., more serious doubt as to the applicability of the c. 75, §3 exemption would be raised. P.D. 12 111 You have asked my opinion as to: ( 1 ) Whether the state auditor may audit these grants and con- tracts to the Elma Lewis School, a non-profit corporation? (2) What scope such an audit may take? At least under the narrow circumstances existing here — i.e., a specific agreement by the organization being audited, permitting the audit to take place, and with the cooperation and acquiescence of ELSFA in the per- formance of the audit by the state auditor, and finally the initiation of the audit process not by independent assertion of authority by the auditor but at the request of grant-making state agencies — it is my opinion that the state auditor may audit certain grants to the Elma Lewis School .The scope of such an audit should be limited to those processes necessary to determine the proper receipt and use of Commonwealth grant monies. The primary statutory authority governing the activities of the state auditor is G.L. c. 11, §12, which provides in pertinent part as follows: The department of the state auditor shall make an audit as often as the state auditor determines it necessary, but in no event less than once in every two years of the accounts of all departments, offices, commissions, institutions, and activities of the common- wealth, including those of districts and authorities created by the general court. In the case of Auditor v. Trustees of the Boston Elevated Railway Com- pany, 312 Mass. 74 (1942), the Supreme Judicial Court held that, under §12, the auditor could not independently audit the accounts of a private corporation, against the will of that corporation. See also, 1930-31 Op. A.G. 94. Despite the prohibition on such private audits, Boston Elevated does not apply to the circumstances here. The relevant differences are as follows. First, unlike the situation in Boston Elevated where the auditor asserted independent power to compel the audit there in question, the auditor is acting here at the explicit request of state agencies whose power to audit grants to the school is clear. The Department of Public Welfare provided funds to the ELSFA under a contract. The contract provided for the purchase of after-school day care services from the ELSFA. Part 6(c) of this contract provides: All financial, program, and other books, records, documents and property relevant to this agreement shall at all reasonable times and in accordance with clause 8 be open for inspection, review, or audit by the Department or its authorized representatives. Thus, the contract specifically gives audit authority to representatives of the Department of Public Welfare. Similarly, the Department of Education made three grants to the ELSFA. Two of these grants were made under the provisions of the Vocational Education Act; the third grant was made for Magnet Education programs. The agreement signed by the ELSFA with the State Department of Education which governs the Vocational Education Act grants provides: 112 P.D. 12 I do hereby certify compliance with the above assurances and, further agree that funds will be used as stipulated in the applica- tion, and that supporting documents for expenditures will be submitted for audit. The grant for Magnet Educational programs was made under Section 8 of Chapter 636 of the Acts of 1974. Regulations under this statute state: The Board [of Education] reserves the right to audit the expendi- ture of all payments of funds made according to these regulations. The Boston School Department applied for this grant for services it stated would be provided by ELSFA, and certified in its application that the regulations governing expenditures of the funds would be observed. Thus, in each instance, audit of the use of these grants by the state has been specifically agreed to by the school. The second distinction lies in the acquiescence of the ELSFA. It has not objected to the conduct of the audit by the state auditor. On the con- trary, it has cooperated fully with the auditor. Any objections the School might have to the request by the state agencies that the state audior be utilized have been waived by the school's voluntary participation in the audit. Cf. Kimball v. First Baptist Society in Amesbury, 68 Mass. 517 (1854); see also Duckworth v. Diggles, 139 Mass. 51 (1885); Fox v. Hazelton, 27 Mass. 275 (1830). Given these factors, the narrow inquiry in this opinion is whether the state auditor may properly accept the request of the state agencies to per- form this voluntary audit. 1 The use of the state auditor by the Departments of Public Welfare and Education to perform these audits is a logical and efficient method of fulfilling the statutory duty of these two agencies to oversee the proper disposition of funds they have granted. 2 The per- formance of audits is, after all, the state auditor's constitutional and statutory function as a state officer. E.g., G.L. c. 11, §1, et seq.; c. 29, §2C; St. 1976 c. 502. His expertise should be available for such situations unless there exist specific prohibitions on such activities. See United States v. Freeman, 44 U.S. 556 (1845); Multi-Line Ins. Rating Bureau v. Com- missioner of Insurance, 357 Mass. 19 (1970); Sutherland, Statutory Con- struction, §65.03 and cases cited therein.' 5 In light of the conclusion reached here, it is unnecessary to reach the more difficult question of the auditor's independent authority in §12 or elsewhere to compel an audit of these grants. 4 iThus, this opinion does not treat situations involving the appropriateness of an independent audit against the will of a private corporation. 2The legitimacy of the auditor's role in performing a service to state agencies has been recognized. Commonwealth v. Woods Hole, Martha's Vineyard & Nantucket Steamship Authority. 352 Mass. 617, 619 (1967). SThis conclusion is not inconsistent with Boston Elevated, supra, since that case involved an interpreta- tion of c. 11, §12 in the context of independent action by the auditor, resisted by the audited party. The auditor's proper role must be interpreted in the context of the particular situation and in light of the objects of the entire applicable legislative scheme. The scope of the auditor's independent authority need not be read to limit his range of permissible activity as a designee in a voluntary situation. See Bristol COtinty v. Secretary of the Commonwealth. 324 Mass. 403 (1949) Universal Machine Co. v. Alcoholic Beverages Control Commission, 301 Mass. 40 (1938). Thus this opinion in no way questions or qualifies the conclusions reached in other cases or opinions of the Attorney General. 4 1 1 should be noted that an amendment to c. 11, §12 after the Boston Elevated decision specifically authorizes the auditor to examine the books of vendors to the Department of Public Welfare in the course of auditing the Department of Public Welfare. ELSFA is such a vendor. Moreover, G.L. c. 29, §2C authorizes the auditor to audit the expenditure of all federal grants. .D. 12 113 Turning to the permissible scope of the audit of ELSFA, such questions ive been addressed in several opinions of the Attorney General. The omissible scope includes the examination of those documents necessary verify amounts received and to check disbursements against them. E.g., H5-46 Op. A.G. 95; 1942-44 Op. A.G. 28, 29; 1935-36 Op. A.G. 107; )30-31 Op. A.G. 94. Accordingly, you may in this instance audit the ;counts of the ELSFA at least to the extent necessary to determine the ceipt and disbursements of funds under the applicable grants and mtracts. In summary, you may accept the requests of the Department of Public relfare and the Department of Education to audit grants to the Elma 3\vis School on their behalf, where there has been no objection by the :hool to such an audit. The audit may include examination of those :counts necessary to determine the receipt and expenditure of grant funds. Very truly yours, FRANCIS X. BELLOTTI Attorney General umber 14. December 22, 1976 tmes S. Cooper, Chairman abor Relations Commission )0 Cambridge Street oston, MA 02202 ear Commissioner Cooper: You have requested my opinion regarding the following question: Upon reaching the mandatory retirement age of seventy specified in §3(2) (g) of Chapter 32 of the General Laws is Commis- sioner Madeline H. Miceli required to retire or may she serve out the remainder of her term which expires on August 25, 1978? is my opinion that Commissioner Miceli must retire upon attaining the laximum age of employment for the group in which she is classified. Several provisions of Chapter 32 state that members of the Retirement /stem must retire upon reaching mandatory retirement age. Section 3(2) I Chapter 32 provides: (e) No member and no person who was ineligible for member- ship because of entering or reentering the service after attaining age sixty, except as otherwise provided for in subdivision ( 1 ) of section five or in section ninety-one, or in section twenty-six of chapter six hundred and seventy of the acts of nineteen hundred and forty-one, or in chapter sixteen of the acts of nineteen hun- dred and forty-two as amended, shall remain in service after attaining the maximum age for his group or for the group in which he would have been classified had he become a member or after the date any retirement allowance becomes effective for him, whichever event first occurs. 114 P.D. 12 G.L. c. 32 §20 (5) (e) provides in part: It shall be the duty of such board to notify each such member or employee ... of the date when such member or employee will attain the maximum age for his group, and such member or employee shall not be employed in any governmental unit after such date except as otherwise provided for in sections one to twenty-eight, inclusive. G.L. c. 32 §1 provides in part: "Maximum Age", the age on the last day of the month in which any member classified in Group I as provided for in paragraph (g) of subdivision (2) of section three attains age seventy, or if classified in Group 2 or Group 4 attains age sixty-five, or if classified in Group 3 attains age fifty-five. Amended by St. 1967, c. 826, § 1 . G.L. c. 32 §3 (2) (g) provides in part: Group I. — Officials and general employees including clerical, administrative and technical workers, laborers, mechanics and all others not otherwise classified. Commissioner Miceli was first appointed as a Labor Relations Com- missioner in 1965 while employed in State service in a different capacity and while an active member of the Retirement System. Her membership in the State Retirement System has continued until the present time. The fact that Commissioner Miceli reached age seventy on September 9, 1976 does not change her status as a member; nor would any waiver of her pension pursuant to G.L. c. 32 §90B change that status. Section 3(1) (c) of Chapter 32 provides in part that "[a] member shall retain his member- ship in the System so long as he is living and entitled to any present or potential benefit therein." (Emphasis added.) Thus, having been an active member in service of the Retirement System upon reaching age seventy and being entitled to a pension upon retirement, it is impossible for Com- missioner Miceli to shed the status of "member" in order to avoid the statutory requirements that accompany this status. The case of Williams v. Contributory Retirement Appeal Board, 304 Mass. 601, 608 (1939) supports this position in holding that an elected official who chose to be- come a member of a county retirement system "was not at liberty to with- draw from membership as he was about to reach the time fixed for retirement, and thereafter continue to serve for the remainder of the term for which he had been elected." Just as Commissioner Miceli can take no steps to withdraw as a member of the Retirement System upon reaching age seventy in order to finish the remainder of her term, she cannot continue her employment by waiving her pension or retirement allowance pursuant to §90B of Chapter 32. The waiver language of §90B, even as broadly construed by a 1972 Attorney General Opinion, only permits a retired employee to waive his pension and thereby render himself eligible for re-employment by the Commonwealth P.D. 12 115 jp to, but not beyond, the mandatory retirement age. 1972 Op. Atty. Gen. Mo. 71/72-15 (January 10, 1972). Because §90B focuses on return to ictive service from "premature retirement," it has no application to the situation of Commissioner Miceli who has reached the age of mandatory etirement during the course of her unexpired term with the Labor Rela- ions Board. Commissioner Miceli thus falls squarely within the above-cited provi- sions for mandatory retirement upon reaching the maximum age specified "or her employment group. She does not qualify for any of the statutory exceptions to mandatory retirement listed in §3(2) (e) of Chapter 32. [n this regard, her status as an appointed official must be contrasted to he status of elected officials who are specifically exempted from the 'equirement of mandatory retirement upon reaching maximum age. G.L. :. 32 §5(1) (d) provides: Notwithstanding any provision of this chapter to the contrary, any member holding office by popular election at the time of attaining maximum age for his group, whether or not he is then entitled to a superannuation allowance, may continue to serve in such office until the expiration of any succeeding term or terms for which he may subsequently be re-elected thereto and during such term or terms he shall not be subjected to compulsory retirement but shall continue as an active member of the Retire- ment System and deductions shall be made from his regular compensation so long as he holds such office and the time of holding such office shall be considered creditable service for the computation of his retirement allowance. No such broad exception to the requirement of mandatory retirement upon reaching maximum age applies in the case of appointed officials. Commissioner Miceli's situation is similar to the facts of a 1961 Attorney General Opinion. That opinion concluded that the Executive Director of the Chicopee Housing Authority, who was a member of the Retirement System and who wanted to forego his retirement allowance upon attaining age seventy in order to remain in his position, had to retire. 1961 Op. Atty. Gen. No. 105 (November 10, 1961). That Opinion referred to G.L. c. 32 §§3(2) (e) and 20(5) (e) as authority for the position that retirement was mandatory. In like manner Commissioner Miceli, as a member of the Retirement System who does not fall within an exception to the mandatory retirement provisions of G.L. c. 32 §§3(2) (e) and 20(5) (e), must terminate her employment with the State prior to the expiration of the term to which she was appointed. Very truly yours, FRANCIS X. BELLOTTI Attorney General 116 P.D. 12