Overview
The Office of the Comptroller of the Commonwealth’s (CTR’s) regulations define what a state employee settlement agreement is for the purposes of processing and reporting these agreements in the Settlements and Judgments fund. However, this definition is narrow and as defined does not include all state employee settlement agreements that may exist. During the audit, we identified instances where employees were allowed to resign in lieu of termination. In these situations, the employees were allowed to resign and remain on the payroll for a pre-determined amount of time in accordance with the agreement. Agency officials and CTR officials both told us that these types of state employee settlement agreements are not required to be reported to CTR according to CTR policies. We believe these agreements are state employee settlement agreements that involve the payment of money to employees/former employees. The individuals involved receive compensation (in this instance, payroll-based compensation) but are not rendering services or using accrued leave time (vacation time, for example) in exchange for this money.
Also, while state agencies are required to report all monetary state employee settlement agreements (that meet this definition according to CTR policies), CTR is not required to publicly report on all monetary state employee settlement agreements. CTR does not publicly report state employee settlement agreements that are reported to them if those agreements are paid by a state agency’s legally available funding source. Quarterly, CTR reports on financial activity of the Settlements and Judgments fund that it administers. This publicly available report shows only monetary state employee settlement agreements paid using the Settlements and Judgments fund.
According to CTR’s website,
[CTR] is required to submit quarterly reports each fiscal year on payments from the Settlements and Judgments Reserve account. These reports provide information on payees, amounts, and the associated Commonwealth of Massachusetts department or agency for settlements and judgments paid from appropriation account 1599-3384.
CTR will not, however, report on monetary settlement agreements paid for using the state agency’s legally available funding. CTR will only review these settlement agreements to ensure they are properly accounted for.
As an example of an alternative approach, agencies in the State of Montana are required under Executive Order 6-2019 to report compensation provided through settlement agreements; specifically,
It is the policy of the executive branch that compensation provided to current or former state employees through settlement or compromise agreements with the state is subject to reporting and transparency requirements.
Unless exempted because of privacy concerns of the individual involved in state employee settlement agreement, Montana state agencies must publish online for a minimum of three years (starting within 30 days of the date of the employee settlement) the date and amount of the state employee settlement, in addition to the state agency where the claim originated.
In the interest of transparency to the public on the use of taxpayer funds for state employee settlement agreements, we recommend that the Office of the Governor (GOV) develop a process to report all monetary state employee settlement agreements to the public, regardless of the funding source, and that this information be published prominently and that it remains available for public inspection for an extended period of time.
Auditee Response
The current format for settlement and judgments reporting by the Office of the Comptroller is dictated by the Settlements and Judgments line item (1599-3384). The Office of the Governor and the Office of the Comptroller are committed to working together to explore ways to improve the timeliness, quality, and transparency of reporting.
Auditor’s Reply
We note that line item 1599-3384 required CTR to report quarterly on the expenditures from the Settlements and Judgments fund but does not prohibit reporting on other settlements and judgments. We view this language to provide a mandatory “floor” on reporting but not a limitation on what additional information can be reported.
| Date published: | January 28, 2025 |
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