Request By:
Mr. Vic Hellard, Jr.
Director
Legislative Research Commission
Capitol Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
At the August 14th meeting of the Personal Service Contract Review Subcommittee, the members discussed the question of the legality of state agencies making either full or partial payments on personal service contracts with the state before any service is actually rendered.
The subcommittee requested that you, on behalf of the Legislative Research Commission, request an opinion of this office as to the legality o this practice.
The legislative policy in the payment of salaries due to public officers and employees is expressed in KRS 45.340. That statute provides in part that " checks shall be tendered to an officer or employe only after he has completed the work for which he is being paid . . ." (Emphasis added). It can be seen that KRS 45.340 clearly expresses the after-the-fact approach to state check writing for salaries. This same philosophy is seen in KRS 64.410, which provides in part that no officer shall demand or receive any fee for services not actually rendered. Ray v. Woodruff, 168 Ky. 563, 182 S.W. 662 (1916) 664; and Webster County v. Vaughn, Ky., 365 S.W.2d 109 (1963) 110.
KRS 44.010 provides that "all claims upon the state treasury that are authorized by law shall be paid when due . . ." (Emphasis added). Here, "when due" includes the requirement that the services have been rendered. The after-the-fact doctrine was recognized in Batesville Casket Co. v. Fields, 288 Ky. 104, 155 S.W.2d 743 (1941) 746.
As relates to the after-the-fact approach in salary payments, we see no distinction between the payment of state public officers and employees and the payment of persons who are under personal service contracts with the state.
However, this after-the-fact policy goes deeper than a mere legislative declaration to that effect. Indeed, the Constitution of Kentucky requires that money paid out of the state treasury to any person, be he state employee or person under a personal service contract, be so paid out in consideration of services actually rendered the state. Section 3 of the Constitution is unequivocal on the point that public emolument to any person must be based on the consideration of public services. By the strongest implication this means "public services actually rendered. " It does not mean "public services to be rendered." Such latter speculation is meaningless from the standpoint of public accounting. In addition, § 171 of the Constitution mandates that the tax revenues of the Commonwealth be spent only for "public purposes." Now it stands to reason that where the person operating under a personal service contract is paid for "services not actually rendered" no public purpose can possibly be involved. It is only after the public service is actually performed or rendered that a public purpose has been subserved and a public service has been effected. In this constitutional context, the state paymasters can only deal with a "fait accompli", a thing already done.
In simple language, these people under personal service contracts cannot be paid based upon what they merely plan, under the contract, to do or what they may do. They can only be paid for what they have done. As the Old Testament so eloquently puts it, "Boast not thyself of to-morrow; for thou knowest not what a day may bring forth."
From the purely practical side, consider the accounting problems inherent where the contractor is paid for services not performed and which may never be performed. To the contrary, our constitution requires the solid, precise, approach of certitude in such payments. There can be no guessing or speculation. If the constitution is observed, there will be no problems relating to recovery of illegal compensation. Thus we can assume that the legislature, in enacting the above mentioned statutes of policy, deliberately had in mind the stern requirements of the constitution. "In the construction of statutes, it is a general rule that the courts will indulge the presumption that the lawmakers knew of existing constitutional and statutory laws." Frost v. Johnston, 262 Ky. 592, 90 S.W.2d 1045 (1936) 1048.
In conclusion, we are of the opinion that the practice of making full or partial payments on state personal service contracts which reflect no services actually rendered is unconstitutional.