Request By:
Honorable John A. "Eck" Rose
Senate President Pro Tem
Honorable Donald J. Blandford
Speaker of the House
Legislative Research Commission
State Capitol
Frankfort, Kentucky 40601
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Nathan Goldman, Assistant Attorney General
You have asked for our opinion on the following question:
"Can the Legislative Research Commission, under the broad powers conferred upon it in KRS 7.330, authorize the Auditor of Public Accounts, who is directed in KRS 43.050(2)(j) to assist the Legislative Research Commission when so requested, to perform this function on its behalf?"
You have stated that the Legislative Research Commission has requested the Auditor of Public Accounts to conduct an audit of various school districts and report his findings directly to the Commission.
The Superintendent of Public Instruction, citing OAG 73-451, has questioned whether the Auditor has the authority to conduct these audits.
We begin our analysis with a review of the applicable statutes.
KRS 7.330 states:
"The commission may:
(1) Perform an audit or investigation of any accounts, books and other financial records of the state government, or of any officer, department, board, bureau, institution, commission, agency, or other unit, of the state;
(2) Examine and audit any fiscal books, records and accounts of custodians of public funds, and of disbursing officers of the state making independent verification of all assets, liabilities, revenues and expenditures of the state and agencies of the state;
(3) Review and evaluate any program supported in whole or in part by state appropriation. In any instance in which a program review indicates inadequate operating or administrative system controls or procedures, inaccuracies, waste, extravagance, unauthorized or unintended activities or programs, or other deficiencies, the commission may report its findings to the general assembly;
(4) Perform audit of any agency, private or semiprivate agency or organization receiving state funds and review audits of such agencies to ascertain that recommendations are implemented within sixty (60) days after issuance of the final audit report under KRS 43.090(1); such reviews may be made by the appropriate interim committee as determined by the commission;
(5) The commission may, at any time, study or review any matter relative to program activities of any state department, agency, or institution;
(6) Require the assistance of any executives and officials, auditors, accountants, and other employes of any agency at any time in the inspection, examination and audit of books, accounts and records."
Subsections (1), (2), and (3) refer to the Commission's powers to audit and investigate state agencies and their programs. We note that it has been established that local school districts are considered to be units of state government. Runyon v. Commonwealth, Ky., 393 S.W.2d 877 (1965), cert. den. 384 U.S. 906. Subsection (6) refers to the Commission's power to enlist the assistance of other officials.
KRS 43.050(2)(j) states that the Auditor of Public Accounts shall "[a]ssist the legislative research commission at hearings and investigations conducted by it and cooperate with the legislative research commission in the preparation of its reports to the general assembly. "
The authority of the commission was recently the subject of an exhaustive opinion of the Kentucky Supreme Court which held that many of its statutorily granted powers were unconstitutional. L.R.C. v. Brown, Ky., 664 S.W.2d 907 (1984). Although KRS 7.330 was not involved in that case, the Court did scrutinize KRS 7.100, which sets forth the general powers and duties of the Commission. The Court described these duties as "[b]asically, . . . fact-finding, investigation, information gathering, record-keeping, publishing, research and education." Id. at 916. The only provision of KRS 7.100 that was declared unconstitutional was subsection (8) which attempted to give the Commission broad legislative powers while the General Assembly was not in session.
However, the Court impliedly held the remainder of KRS 7.100 to be constitutional. Subsection (2) allows the Commission to:
"Make or cause to be made such investigations into statute law, legislation, governmental agencies and institutions and matters of public policy as will aid the general assembly in performing its duties in the most efficient and economical manner. In making such studies and investigations between the regular sessions of the general assembly, the commission shall give priority to those subjects requested by the general assembly. "
We note that KRS 7.100 was first enacted in 1948 (Acts 1948, Ch. 15, § 2).
Apparently, in an attempt to further define the Commission's investigative function vis-a-vis state agencies, KRS 7.310 to 7.380 were enacted in 1966 (Acts 1966, Ch. 42, § 1). KRS 7.310 states:
"The intent of KRS 7.310 to 7.380 is to insure systematic and thorough evaluations of agencies of the state government and their various programs for the purpose of furnishing the legislature with factual information necessary to the discharge of its legislative duties. The general assembly finds that adequate information is not available for each session through which the members of the legislature can determine the needs of the various agencies and departments of the state government, and the effectiveness of their programs. The general assembly also finds that the legislative session is not adequate time in which to review the financial operations of each agency. It is the intent of KRS 7.310 to 7.380 to provide the legislature with adequate factual information by which to exercise its valid powers."
It is, therefore, beyond cavil that the Commission has the authority to conduct audits of local school districts.
We turn now to KRS 43.050(2)(j) and its relationship to KRS 7.330(6). In our opinion, these two statutes are clear and unambiguous. The Commission has been given the authority to enlist the assistance of the Auditor of Public Accounts in order to fulfill its investigatory responsibilities.
The Superintendent of Public Instruction has raised the question of the effect of OAG 73-451 on this issue. In that opinion, we stated that, pursuant to KRS 156.265, the Auditor of Public Accounts could not undertake an audit of a local school district unless so requested by the state committee for school district audits. KRS 156.265(2) states, in part: "Upon the written request of the state board [of education], the superintendent of public instruction, the attorney general, the auditor of public accounts or the governor, the committee may cause the accounts to be audited. " Based on this, we opined in OAG 73-451 that the Auditor could not, unless so directed by the state committee, undertake to audit local school districts. We did not consider in OAG 73-451 the effect of KRS 7.330. Consequently, we do not believe that OAG 73-451 is applicable to the question raised herein. Furthermore, we believe that the reasoning of OAG 73-451 may be questioned. However, since we do not believe that that opinion is relevant to the question presented here, we will not undertake to reexamine OAG 73-451 at this time.
Rather, we must now determine whether KRS 7.330 and KRS 156.265 are in conflict. Both relate to the auditing of local school districts. Both appear to permit such audits to be undertaken by separate agencies of state government.
It is a principle of statutory construction that two or more statutes dealing with the same subject matter must be construed in pari materia and any apparent conflict between them must be reconciled, if possible, so as to give effect to both. Sumpter v. Burchett, 304 Ky. 858, 202 S.W.2d 735 (1947).
In our opinion, these two statutes which grant the power to audit local school districts may be interpreted so as to reconcile any presumptive conflict. KRS 156.265 does not appear to be couched in terms of exclusivity; that is, it does not prohibit the statutory authority of another agency to conduct school district audits. See, KRS 156.265(3). Furthermore, since the statutes relate to different branches of state government, their purposes are obviously different and not in conflict. The state committee is responsible for seeing that school districts are audited to insure that these districts comply with existing state statutes. The Legislative Research Commission may want to audit school districts so that the General Assembly may have sufficient information when it contemplates changing existing statutes or enacting new statutes. The audits may focus on different aspects of the operation of the local school districts (i.e. a management audit vs. a financial audit) . Consequently, it is our opinion that these two statutes should be interpreted to allow both the state committee and the Commission to authorize local school district audits consistent with their statutory authority and that such interpretation is both logical, reasonable and consistent with the apparent intent of the legislature as evidenced by the words of the statute. Gateway Construction Co. v. Wallbaum, Ky., 356 S.W.2d 247 (1961).
In our opinion, the Auditor of Public Accounts may audit local school districts on behalf of the Legislative Research Commission when so directed by the Legislative Research Commission in fulfillment of its statutory powers pursuant to KRS 7.330.