Overview
Throughout this audit, we requested documentation to support claims made by auditees to determine the number, reason, cost, and purpose of state employee settlement agreements executed by public and quasi-public agencies on behalf of the public that they serve. For example, we requested supporting documentation for 80 state employee settlement agreements that contained confidentiality language. We did not receive an original employee claim, complaint, or grievance for 37 of these 80 (46%) settlement agreements. These 37 settlements spanned 11 agencies under audit. As a result, we were unable to determine whether the state employee settlement agreements were supported by a complaint or if the use of confidentiality language was appropriate.
In explaining this lack of documentation, a number of agencies reported to us that there were no underlying complaints that led to the state employee settlement agreement, and in some instances that settlement agreements were used prospectively to prevent the filing of complaints, such as when entering into a settlement agreement with an employee whose employment was being terminated in order to prevent them from suing the agency.
We understand that state employee settlement agreements are used in a number of different contexts, but expect that the expenditure of public money, and the use of confidentiality clauses that deny the public access to information, be supported by sufficient documentation to demonstrate to agency managers, auditors, and others that they are necessary, appropriate, and justified. Absent that, the public is asked to accept the word of agency management—which may have created the need for the settlement agreement due to its own misconduct—that the expenditure of the public funds and that the denial of public access to information are appropriate. Even where no complaint exists, state employee settlement agreements should be accompanied by documentation to justify their use, especially when confidentiality language obscures them from public view. Maintaining this documentation will help enhance oversight and will increase public trust that taxpayer money used to fund these agreements is being spent fairly and appropriately.
We also note the lack of consistent documentation of funding sources for the payment of some settlement agreements. As demonstrated in the “Source of Funding for State Employee Settlement Agreements January 1, 2019 through December 31, 2024” chart on page 12 of this audit report, AGO was unable to provide us with the funding source for $103,761 in settlement agreement payments. The funding source for this and other government spending should be readily available to support ongoing transparency and accountability within state government.
| Date published: | January 21, 2026 |
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