2025-04-02 00:00:00 - Subcommittee on chapter 250 of the acts of 2024

SEN FRIEDMAN - I am Senator Cindy Friedman, Chair of the subcommittee. Joining me today are my8 colleagues, Senator Will Brownsberger of Belmont, Senator Joe Comerford of Northampton, and Senator Paul Feeney of Foxborough. The purpose of this hearing is to elicit testimony from experts in the fields of constitutional law and auditing procedures as it applies to the proposed audit request of the Massachusetts legislature by the office of the State Auditor. I'd like to begin this hearing by setting the context in which the hearing will be conducted and also around how we will proceed. As many of you know, in November 2024, the voters of the Commonwealth approved ballot question one, an initiative petition to add the legislature to the list of entities that may be audited per statute by the office of the State Auditor. The statutory change took effect on 01/03/2025. On that date, Auditor DiZaglio sent correspondence to the Senate and House initiating an audit of each legislative chamber.
In her audit initiation letter, the Auditor stated that the scope of the audit would cover all the topics the auditor's office was unable to fully review in its previous audit of the legislature in 2024. The 2024 audit was a financial audit conducted by the office of the State Auditor using information from publicly available and posted financial audits that are conducted by outside independent auditing firms for each legislative body on a yearly basis. The Auditor stated at different times that all topics would include, but not be limited to a performance audit of core workings of the legislature, such as how and to what extent the legislature is ensuring an equitable mode of making laws, what bills are taken up in what order, how committee memberships and chairmanships are determined, whether and to what extent legislative policies and procedures are being equitably applied to members, etcetera. In other words, all aspects of the core workings of the legislature and how it conducts its business.
On 01/06/2025, the Senate established this subcommittee to consider the constitutional and procedural issues raised by the ballot question and the office of the State Auditor's proposed audit. The subcommittee entered unchartered territory given that what the Auditor is requesting and how she is requesting it is without precedent in the Commonwealth or167 anywhere in the country. Since the subcommittee was established, we have been unable to ascertain what the office of the State Auditor proposed audit or audits177 would actually include. While the office of the State Auditor's answers with respect to the audit scope have been inconsistent, we must still determine whether such an audit is permitted under the Massachusetts Constitution, including Article 30. Additionally, the office of the State Auditor has stated its intention of using the generally accepted government auditing standards, GAGAS or the yellow book as its guideline for the proposed audits, which raises a series of questions regarding the yellow book standards for bias, conflicts of interest, and how the audit would proceed.
The subcommittee met with the office of the State Auditor on February 11th to seek answers to these questions along with the questions of constitutionality and followed up this meeting in writing to that office regarding the outstanding issues from that meeting. The subsequent response from the office of the State Auditor continued to leave unresolved this242 subcommittee's questions related to constitutionality, scope, and bias. This hearing is being held in order to gather information on these unresolved issues so254 that this subcommittee can produce a reasoned, informed, and well researched258 report. This subcommittee of the Senate is charged with determining if the office of the State Auditor's audit can be conducted consistent with the constitution of the Commonwealth, and if so, would be done using the best practices of auditing. In the Senate, we conduct the business of this legislative chamber through the committee process.
As part of that process, we hold hearings to seek information to instruct and guide our work, most especially on important questions of constitutional powers. The speakers you will hear today are considered experts in their field and represent a spectrum of opinions on the issues we have identified. The subcommittee invited the office of the State Auditor to recommend speakers for today's hearing, but the office of the State Auditor declined. Specifically today, the subcommittee will hear testimony on the current318 constitutionality of an audit of the legislature conducted pursuant to Chapter 250 of the Acts of 2024, and generally accepted government auditing standards, GAGAS. We plan to have the hearing divided into three parts. First, testimony from invited experienced professionals and subject matter experts on constitutional law and state government.
Second, testimony from invited experienced professionals and subject matter experts on government auditing standards. Third, testimony from members of the public that have preregistered. The subcommittee posted a public hearing notice on the legislature's website on Tuesday, March 25th with directions on how members of the republic could register to provide testimony. The original deadline to pre register was 5:00 PM on Monday, March 31st. The subcommittee extended that registration deadline a full 24 hours to 5:00 PM on Tuesday, April 1st, which was yesterday. With no members of the public having preregistered, we encourage any members of the public who wishes to have their comments recorded on the current constitutionality of an audit of the legislature conducted pursuant to Chapter 250 of the Acts of 2024 or the generally accepted government auditing standards, GAGAS, to please submit written testimony to the subcommittee by Friday, April 4th at 5:00 PM.
Shortly, we will invite the experienced professionals and subject matter experts up one by one to present testimony. After each provides their testimony, there will be an opportunity for the subcommittee members to ask questions. We ask that any435 audience members and members of the committee, please silence their devices and keep any questions they may have for the invited testifiers to written testimony, which, again, the subcommittee will be accepting on this matter until this Friday, April 4th at 5:00 PM. Now let's begin, we will begin by459 hearing from invited testifiers on461 the matter of constitutional law and state government. The first to speak on this matter, the subcommittee invites professor Lawrence Friedman to speak. Just to note, professor Friedman and I are not related, although I would be honored to have him as a family member. We just share the great last name. Professor Friedman, before you begin, I want to give a brief bio introduction.
Professor Lawrence Friedman, author of a constitutional law casebook and co-author of the leading state constitutional law casebook, is a faculty member at New England Law Boston where he teaches courses in constitutional law, privacy law, and national security. He is a recognized expert in federal and state constitutional law and was selected by Oxford University Press to edit its series on the American state constitutions. Professor Friedman also frequently serves as a constitutional law expert for WHDH TV Boston and is a contributor to many legal and non-legal publications, including The Hill, Commonwealth Magazine, and Law 360. In addition to New England law, Professor Friedman542 has taught law at Boston College Law School and Harvard Law. Before teaching, he was an associate with Choate Hall and Stewart in Boston and served as a law clerk with the New Hampshire Superior Court and then as law clerk to the honorable John T. Broderick Junior of the New Hampshire Supreme Court. He holds an undergraduate degree from Connecticut College, a law degree from Boston College Law School, and an LLM from Harvard Law School. Welcome, Professor Friedman.
LAWRENCE FRIEDMAN - NEW ENGLAND LAW - Thank you. Thank you for the opportunity to address some of the constitutional issues surrounding Chapter 250 of the Acts of 2024 and to answer your questions. I would like, in my opening remarks, briefly to address some of these issues. First, that the Attorney General allowed the audit initiative proposal to proceed to the November 2024 ballot is immaterial to the question whether it is constitutional and firm. Article 48 authorizes the Attorney General to exclude proposals from the initiative petition process on several bases, none of which necessarily encompasses violations of the separation of powers or other structural constitutional defects. Indeed, as the website for the attorney general's office makes clear, petitions that appear on a ballot and are approved by voters could later be challenged in court and invalidated on those grounds. Here, the attorney general concluded that the audit initiative proposal did not implicate any of the bases for exclusion from the ballot named in article 48. Accordingly, in this case,633 this proposal could proceed to the ballot635 notwithstanding that it might possess some other constitutional infirmity such639 as a separation of powers problem. Again, the fact that the attorney general approved this to go to the voters does not mean that there were not other constitutional issues that could later be litigated, and I believe the attorney general anticipated exactly that when she approved it. Second, that the initiative proposal was approved by more than 70% of the658 voters who participated in the 20 24 election is immaterial to the question whether it is constitutionally infirm. To understand why this666 is so, consider a hypothetical initiative668 proposal. As noted by670 the attorney general, her office may not to decline excuse me, may not decline to certify a petition that conflicts with a constitutional guarantee not mentioned in amendment article 48, such as due process or equal protection. Imagine a ballot initiative providing for increased penalties for left handed people in case of motor vehicle violations. Though such a proposal raises a clear equal protection issue, the attorney general would allow it to proceed because equal protection is not a ground for disapproving a petition. The initiative passes with more than 70% of the electorate's approval. When that equal protection issue is litigated after706 the law is enforced against the left handed person, a review in court would not regard as relevant in determining whether the law violates the constitution as applied the fact that the716 proposal enjoyed more than 70% support from the electorate. In short, the popularity of a proposal has no bearing on its constitutionality.
Chapter 250 of the Acts of 2024 violates the Massachusetts constitution. It runs afoul of the constitutional provisions authorizing each house of the general court to set736 its own rules and undermines basic separation of powers principles. As an initial matter, I note that the auditors belief that she can audit the general court as if it were another unit of Massachusetts government is at odds with the Constitution's structural framework. Simply put, the general court is not another unit of Massachusetts government. Rather, the legislature is the source and the hub of all of the Commonwealth's government for which the constitution does not specifically provide. As stated in part 2, article 4, the scope of the766 general court's authority in this regard encompasses the full power and authority to do many things, including to make, ordain, establish all manner of wholesome and reasonable orders, laws, statutes, ordinances, directions, instructions, either with penalties or without. So780 is the same be not repugnant or contrary to the Constitution as the legislature shall judge to be good for the welfare of the people of the Commonwealth. I'm sure you are all very familiar with the legislature's purview. This is a substantial grant of authority. Neither the scope of authority assigned to any executive constitutional officer799 nor the authority granted the judiciary801 is commensurate. Thus, while the Constitution separates and divides legislative, executive, and judicial power among 3 constitutional departments, it may fairly be said that the general court is first among equals. It would be anomalous if an executive officer whose specific responsibilities and resources are not constitutionally defined, and indeed whose budget and resources are set as a matter of legislative grace, had the authority to subject the general court to an audit as if it were just another executive agency.
More specifically, the Massachusetts constitution expressly authorizes each house of the legislature to promulgate its own rules and manage its own proceedings as it sees fit. As you know, part 2, chapter 1, section 2, article 7 authorizes the847 senate to, quote, choose its own president, appoint its own officers, and determine its own rules and proceedings, and the house enjoys similar authority. The Massachusetts Supreme Judicial Court has held that this authority is a continuous859 power absolute and beyond the challenge of any other tribunal. It is difficult to see how an audit inquiry into any aspect of the ways in which either the house, in which either house of the general court chooses to conduct itself would not interfere, even if minimally, with the constitutional authority of each house to manage its own877 affairs. In addition to undermining the express power of each house to enact its own governing rules, an audit of the legislature inevitably would intrude885 upon the deliberative space protected under Article 21, the speech and debate clause, which the Supreme Judicial Court has construed as reaching every act resulting from the nature and in the execution of the legislative office.
Next, in respect to separation of powers, the Supreme Judicial Court has long understood the Massachusetts constitutional scheme to preclude 1 department of government from interfering with the functions of another. An audit is, at bottom, an investigation, and the power to investigate the general court could threaten to undermine its basic functioning. As US Supreme Court Justice Robert Jackson warned in the context of criminal prosecutions, the power to investigate pursuant to, for example, auditing standards that the auditor herself chooses could lead to situations like those in which Justice Jackson said, the prosecutor picks some person whom he dislikes or desires to embarrass or select some group of unpopular persons and then looks for an offense. For there lies the greatest danger of abuse of prosecuting power. It is here that law enforcement becomes personal. The potential for an audit to undermine the general court's basic lawmaking functions exists even if the author were to acknowledge that inquiries related to legislative deliberation are off limits. Former judge Dan Winslow has argued that a line can be drawn between deliberative and administrative functions in the legislature and that the auditor should have the authority to audit the latter. But even as Judge Winslow recognized, there exists a gray area between these functions that a court may not have the competence to clarify, and which could compel a court, should it not view the case as raising a political question, to dictate to the legislature the limits of its own authority to determine how it should function. Even990 assuming some agreement about the administrative nature of a particular aspect of legislative functioning, there lies the possibility that an unscrupulous auditor would998 use the opportunity to audit these functions as a wedge with which to subject the general court to continuous audit requests, and should the legislature fail to respond to the auditor's satisfaction, litigation over those requests, which ultimately could undermine the legislature's ability to conduct its constitutionally assigned business on its own terms. Indirect interference with the general court's functioning is no more constitutional than direct interference. A final point. In respect to the assertion that because the general court has been subjected to audits in the past, the auditor has the authority to conduct her proposed current audit. As has been noted by others, there is evidence that these past audits, none of which was as comprehensive as what the auditor currently seems to seek, were accomplished with the legislature's permission, which consent the legislature is free to give. It remains, however, that 1 legislature cannot bind its successor. In other words, 1 legislature's determination to diminish its constitutional authority by consenting to or cooperating with some form of audit has no bearing on the authority of a subsequent legislature to do so. The general court, no more than the1063 judicial branch, the office of the governor, or the auditor herself cannot by its consent alter the constitutional boundaries of departmental authority. Thank you for allowing me the opportunity to share1075 these remarks with you, and I look forward to your questions.
SPEAKER1 - Thank you very much. Questions from the committee? You ready? Senator Brownsberger?
SPEAKER3 - Sure. Could you just unpack further the sort of direct versus indirect, interference and undermining concepts?
SPEAKER2 - So the direct interference would be an audit that effectively tells you how to run your chamber. Right? Indirectly, it would be okay. Let's assume for the purpose of this argument that everyone agrees that certain administrative functions can be the subject of an audit. Perhaps, those things that the Senate has allowed to be audited by an auditor of its own choosing in the past. Well, suppose the auditor doesn't like the1123 response it gets. Suppose it doesn't like the documents it gets. Suppose it thinks that the auditor believes that they are entitled to more. They're gonna have to go force the1133 legislature to produce those documents by presumably seeking help of the attorney general to
SPEAKER4 - go to
SPEAKER2 - court and get a court order compelling the legislature to do that. There's a question, how much would be enough? When would that end? In other words, a continuous series of requests, a continuous series of requests even over things that maybe everyone agrees could be subject to an audit could effectively undermine the ability of the legislature to do what it does by having to deal with that. I should add,
whatever administrative functions and and I should also say, I don't necessarily agree that we could cabin administrative functions to be separate from deliberative functions. The rules are yours to make. You don't have to establish1178 any of the rules that you establish to run the functioning of this house. And, it seems odd to me that the legislature could, excuse me, that the auditor could perpetually and consistently request documents and say that you're not giving her what she needs when1193 you don't have an obligation to have these rules to begin with. Does that make1197 sense?
SPEAKER3 - It does. If I1199 could follow-up. Yes. So,
and in fact,
an auditor could use requests within some, let's put it in quotes, administrative category, and push those requests to influence as as a way of pushing the legislature to do something outside those
SPEAKER5 - Absolutely.
SPEAKER3 - That administrative category.
SPEAKER2 - There's nothing I should add, I'm not an expert, in auditing auditing standards and I understand you have other experts here today who will be testifying about that. But I am familiar with litigation. I was a litigator once and and this is how it works. If you don't like the answers you get, you keep asking, keep asking for more documents.
SPEAKER3 - And even if you do like the answers you get, you might just ask for more documents for some collateral purpose.
SPEAKER2 - Yes.
SPEAKER1 - Senator. Yeah.
SPEAKER4 - Thank you, madam chair, and thank you, professor. I was
SPEAKER3 - my name is,
SPEAKER4 - happy to hear, you know, 1 of these where we wrestle with this. How do we do this? Is there a line between administrative functions and and, deliberative functions in the legislature?
Struggle with that. Right? Is that something that, as a community, we can go back to the side and say, like, this is, you know, this is something that we can do without violating the constitution. So the practical question for you, considering what you just told us. Any commentary, how do you advise, you know, a legislature
SPEAKER2 - Isn't that Jim Stone? Yeah.
SPEAKER4 - That's right.
SPEAKER2 - It's a difficult question, senator. That's unconstitutional because of that.
I'm having a very difficult time understanding how this law could be constitutionally,
how you could constitutionally comply with it without potentially leading to a lot of problems, not just for each house, but for the courts that will be forced to reconcile. Let me give you a slightly different take on this. So, Judge Winslow talked about the auditing of administrative functions as part of the checks and balances. But there's nothing in the Constitution that poses the office of the auditor as a check or balance on the legislature. The legislature is entirely responsible for every responsibility that the auditor enjoys. And it seems odd to me that the auditor should have this power over the body that creates the office of the auditor. And I think the puzzle, the reason I've thought it through is that the auditor is not supposed to be a check-in balance of the legislature. The auditor is supposed to be a compliment to the legislature to make sure that all of the funding that you appropriate and then you assign to spend is being spent the right way. This was, this is like trying to fit a square peg in a round hole. I don't know if that's exactly what you wanted. Probably not.
SPEAKER4 - No. No. It's it's obviously not understood.
SPEAKER6 - If I
SPEAKER4 - could not have changed my mind. Follow-up questions. You're talking about checks and balances.
Principles that we would be interfering, in another branch of government when we need cold hearings. Understanding that we appropriate, I think the the legislature is funding. And the idea with our post audit notice that, the hearing committees is that we make sure that that money is being spent per legislative time for our appropriations. Do you see any conflict there? Is this happening? Is it completely different? You know, we've been we've been told, that the the argument that we're having about violent constitutional principles and separation of powers, is is is also being done on our end with these folks. Is that true?
SPEAKER2 - I'm inclined to agree with your characterization of it as apples and oranges. I think that the constitutional authority of this legislature, and indeed any legislature, to make sure that the money it is appropriate in spending is being spent the way it wants to be spent is unquestioned, And the US Supreme Court has said the same about the United States Congress, and it is clear that the Constitution John Adams wrote gives you the power to determine how much money to bring in and where it should go. It would be odd indeed if you did not also have the power to determine that it was going where it's supposed to go.
SPEAKER3 - Could you, you know, there's sort of several different sort of independent
bases in the Constitution for rejecting the concept of the auditors auditing the legislature. You've, I think, talked at some depth about the, sort of fundamental concept of what the legislature is and how it relates to the executive branch.
SPEAKER1 - Maybe you could talk
SPEAKER6 - a little bit.
SPEAKER1 - Excuse me, I've just been told that nobody can hear anyone but me. That's a terrible thought.
SPEAKER3 - Thank you. I was going to ask just if you could un pack the, how the speech and debate clause bears on this question a bit more. So,
SPEAKER2 - the speech and debate clause, I suppose you could look at it as the textual source for
a privilege that you enjoy that John Adams intended to exist in each House of the legislature, the deliberative privilege. And, there's also a speech and debate clause in the US Constitution, which serves a similar function. And, the idea the framers had was that you need a space to go to where you can be honest with your colleagues in order to reach compromises and agreements that create the policies that are in the best interest for the people of the Commonwealth. And, that legislators need this deliberative privilege, so that there aren't people literally at their shoulder, whispering their ear, or threatening them to do certain things. You need a place to go where you and your colleagues can know that everything you say will be kept between you. And it provides immunity from suit based on anything you say in the context of the delivery of privilege, but it also carves out, or not carves out, maybe identifies more specifically this core function that each House has, which is to deliberate policy and to pass laws or not pass laws as the case may be. And, it has been interpreted as giving you the ability to figure out how to do those things the way you want to, accountable to your constituents. If they don't like the results or whatever it is they're hearing from you, they can take appropriate action, but you need that space. John Adams envisioned the deliverable space as being 11676 where all of those details of policy would be worked out without you having to worry about what1682 the consequences are of what you say. Does that make sense?
SPEAKER3 - Yeah, it does. I mean, and, and, tie that to the question of the auditor auditing.
SPEAKER2 - So, I think that it, the deliberative space that each legislature enjoys based on supreme judicial court precedent is pretty large, and the court has said that it's not just the things you say on the floor, it's everything you say in committee, working together, figuring out how to do the job of legislating for the Commonwealth. How do you do that? Well, you probably need a lot of other things to do that. You need staff, you need people around you, you need resources, and those are therefore connected to the deliberate privilege. Even though all of those things might in litigation not be privileged, and that's an open question, they're certain, they're certainly essential to the deliberative function.
SPEAKER3 - What did you just mean by that in litigation?
SPEAKER2 - So, the speech and debate clause is really a privilege from being sued for something you say. It also happens to identify those areas, or rather the area in which the legislature will perform its core function, which is policy making or not policy making as the case may be. It works with the constitutional provision that provides that each house is the manager of its own rules to basically allow the legislature to control the terms by which it is representative without interference. To go back to something you said earlier, if an if someone from another branch of government was interfering with your ability to1786 do those things, either directly or indirectly, it would undermine your ability to be a representative of your constituents in the way the Constitution contemplates.
SPEAKER3 - So, having an auditor even making administrative requests, perhaps because the auditor likes or didn't like something the legislature was doing, would interfere with our ability to engage in speech and debate because our speech and debate might lead the auditor to do X, Y, or Z.
SPEAKER2 - Yes. I mean, I think it could even, Look, to do the things you do, you need, you can't, I assume you don't all just show up and sit in a room and debate. You have staffers, and you have support, and you have resources to help you make sure that that debate is informed. That's got to be included within the larger scope of a deliberative function, right. And, even some of the more administrative functions that the auditor has identified, if those were to be questioned, it might change your ability to do the things that you do as a matter of, as the constitution requires, to the best of your ability. Think about, so 1 of the, I believe and please correct me if I'm wrong, that 1 of the requests of the auditor is something related to non disclosure agreements. Now, it's my understanding that non disclosure agreements are not illegal under Massachusetts law and that the governor has taken steps to deal with that in the executive branch. But if the legislature should feel that it needs non disclosure agreements for some reason, it seems odd to me that the auditor would be in a position to undermine that. Why might you need non disclosure agreements? Well, even in, you know, cases in which there, nothing horrendous has happened, presumably if you are going to let a staffer go, you would like some assurance that they're not going to reveal everything that they know about what you were deliberating, because that would undermine the deliberative function. Right?
SPEAKER3 - I suppose. Do you, is there a broader national or federal constitutional context or current events context that's relevant to this conversation?
SPEAKER2 - I have not thought about it from that perspective. I do think that it is interesting to see what happens in other states, under other state constitutions.
In some ways, each state constitution is unique, and I have given you my opinion on an analysis of the Massachusetts Constitution.
SPEAKER3 - Thank you. Senator Comerford?
SPEAKER7 - Thanks, Madam Chair. Professor Friedman, thank you for your time. I wanted1955 to go back to where you suggested1957 that 1 legislature can't bind1959 another, and I wondered if you could expound a little. You talked about potentially the the risks if if we rubbed up against a constitutional change or challenge that that would bind a future legislature.
SPEAKER3 - Could
SPEAKER7 - you talk more about that?
SPEAKER2 - So my understanding is that there was some something resembling an audit happened in the past, although nothing on the scope of what has currently been proposed, and that the legislature voluntarily complied with with that to a certain extent. My point is simply that that is not binding on you. That 1 legislature, by its actions, can't change the constitutional boundaries. In other words, you now could consent to everything that the auditor asks and that would not bind your successors. That would not create a precedent, because that is just the consent that you have given. The constitutional lines remain the same.
SPEAKER7 - Helpful. Madam Chair, can I ask another? Professor Friedman, the auditor has implied, that without, her ability to audit the legislature, there wouldn't be a check on the legislature. Could you share with us your thoughts about what checks the, the power we have? Well,
SPEAKER2 - John Adams did create a check on you. It's called elections, and if you are not doing what your constituents believe you should be doing, presumably the effects of that will be felt in November.
SPEAKER1 - Thank you.
Thank you. I have a question. If you, suspending for a second the issue of whether,
the auditor has the authority under the constitution, just hold that aside for a minute. Her position is that the statutory changes brought about by the ballot initiative,
although they took effect on January 3, she believes that she could audit periods of that prior anything prior to that date could be open to audit. Do Massachusetts statutes generally grant prospectively or retroactively in your opinion? What does that mean here?
SPEAKER2 - Well, the SJC has held that unless it specifically says that a statute will apply retroactively, that it only applies prospectively. I don't believe there's anything in the ballot initiative that suggested that it would apply retroactively. Okay.
SPEAKER1 - Okay. Is there any other questions? Senator Feeney?
SPEAKER4 - Thank you,
SPEAKER1 - madam chair.
SPEAKER3 - Thank you,
SPEAKER4 - madam chair. Thank you, professor.
2 questions.
You had mentioned in your in your remarks, and and this is something I'm hoping you can dig into a little bit deeper, the limited review of the attorney general when it comes to moving forward on a on a ballot question. We have heard from many who have reached out to, certainly, this subcommittee and our colleagues in the legislature to say, it is constitutional. The attorney general said so. It was on my ballot. Therefore, you must comply because it's constitutional. And and I think you in your remarks, you did a great job in kind of explaining that. Can you dig a little bit deeper into that? How limited is that review of the attorney general? It sounds like a function that maybe we should take a look at at at some point going forward so that voters aren't forced to vote on something that may be considered unconstitutional. Yes.
SPEAKER6 - I'd be happy
SPEAKER2 - to have that discussion with you when you're ready to have it. Yeah. But essentially, Senator, Article 48 provides a checklist of certain things that cannot validly2199 be the subject of a valid petition, and it's limited. It's limited mostly to a handful of individual2207 rights for, for our2209 purposes here that, as I suggested, don't even include such fundamental rights as due process and equal protection. And so an attorney general could look at a proposal and see an obvious procedural due process or substantive due process or equal protection problem, and that is not a basis for withholding it from the ballot. Similarly, there are all kinds of structural separation of powers issues that are not on that list of valid reasons. I think that although the attorney general must do some substantive analysis of the petitions that come across your desk, it is in many ways a ministerial function.
SPEAKER4 - Understood. Okay. And, I'd be happy to have that conversation as we get through this 1, figuring out
SPEAKER2 - I understand.
SPEAKER4 - Because it it it does sound it's it's a little bit of a quirk of that article, I think, where, you know, people are voting on something of which the implementation could be unconstitutional.
SPEAKER2 - So, direct democracy here in the Commonwealth is actually a little bit more circumscribed than it is in other states. And, the framers of Article 48 had in mind, I think, what you are getting at, which is maybe there are some things that shouldn't be left to a vote of the people, not that the people don't know a lot about a lot of things, but the way the people make decisions is very different, for example, than the way you make decisions, which is deliberately. And, again, with John Adams, the constitution he created emphasized the deliberative function. That laws would not result, from some sort of ad hoc reasoning. You'd have the time to think about it. You know, everybody votes for their own reasons, and they vote based on the best information they have.
SPEAKER4 - Alright. Thank you. It's helpful. And I got 1 more, Madam Chair, if it's okay with the professor. We tried, as chair Friedman had mentioned in her opening remarks, we really2317 wanted to hear from kind of a cross section of of people that had, you know, different framers of2321 reference on on this issue as we've been struggling2323 with it the last couple months to get this right.2325 Unfortunately, the office of the state auditor declined to be here and to to, explain their perspective. Happy to have you and other experts that are with us today, enlightening us on on kind of the finer points of this. Do you know of any other legal or constitutional scholars or, you know, some of your colleagues in academia that actually agree with the perspective of the Office of the State Auditor that this is constitutional on its face, that this can be done, that there are no constitutional issues. Is there anybody that you're aware of? You know, we certainly have not heard from them here, recently.
SPEAKER2 - Senator, I am not aware of any academic who holds that position. The colleagues
who teach or study constitutional law with whom I've spoken essentially, I think I can say agree with me. And, 1 of them went so far as to say this is not even a close question.
SPEAKER4 - Not even a close question. Thank you. Thank you, madam chair.
SPEAKER1 - So I have, 1 last question. Just to if I if and I do need to explain this to to constituents, basically what you're saying is that it's the court's, responsibility to decide constitutionality, not the attorney general. Is that
SPEAKER2 - So, when it comes to initiative petitions, there's a process in place under article 48 and the attorney general is an initial check that the framers of article 48, here are some things that we do not want to be the subject of such petitions, but it's not everything. And the Attorney General is not empowered to check every petition to ascertain whether there is some constitutional issue lurking there other than the very few that are named in Article 48. Does that make sense?
SPEAKER1 - Yes. Yes. What are, do you know what those are that are named? Well, free speech,
SPEAKER2 - for example. There can't be some, direct democracy restriction on speech. You know, that is nothing, that is a petition that would not go to the ballot.
SPEAKER1 - Okay, I see. Okay. All right.
Thank you so much for your time and
for your testimony. We really appreciate it.
SPEAKER2 - Well, thank you. And I now I think I have some sense of what my students feel.
SPEAKER1 - Then we feel like we've accomplished it.
SPEAKER2 - Those are all for the students.
SPEAKER1 - Okay. Next, we invite Professor Ray LaRaja to speak. Professor LaRaja is a professor of political science at the University of Massachusetts Amherst. His areas of expertise include constitutional democracy, campaign finance, finance, elections, American state and local politics, public policy, and political forum. Professor LaRaja is the cofounder and former coeditor of the Forum, a journal of applied research in contemporary politics,2509 and the cofounder and co director of the UMass poll, which conducts public opinion research in Massachusetts and The United States to inform policy making. He's also authored multiple publications on contemporary American politics and campaign finance. You must be very busy these days. He holds a master in public policy from the Kennedy School of Government at Harvard and a PhD from the University of California at Berkeley. Welcome, professor LaRaja, and thank you for joining us.
SPEAKER4 - Thank
SPEAKER5 - you. Madam Chair Friedman, and members of the subcommittee, thank you for the opportunity to testify today. I believe the power intended to, give to the state auditor by ballot question 1 threatens a core principle of constitutional democracy. Massachusetts voters have been asked to decide whether the state auditor, a member of the executive branch, should be authorized to audit the legislature without its consent. Now, on the surface, this might sound like a simple move towards transparency, but beneath the surface, question 1 threatens 1 of the foundational principles of American constitutional government, separation of powers. You heard it from my colleague, and I'll say some more. Moreover, it affects the power of a branch that is chiefly responsible for representing the voters of the Commonwealth. Notably, the ballot question challenging legislative independence in Massachusetts comes exactly at a time when the premier legislative institution in America, Congress, has never been weaker, and with their power seized by an executive at dangerous levels. At this time, state legislatures should be the exemplars of legislative independence. They are the bulwarks against executive overreach and principal guardians of representative democracy. The idea that government should be divided into 3 distinct co equal branches, legislative, executive, judicial, goes back to the French political theorist Montesquieu, who warned that liberty is endangered when 1 branch can dominate the other. And John Locke added that separation of legislative and executive powers is essential for protecting individual rights. These were embedded in the Massachusetts Constitution, the oldest functioning written constitution in the world. Article 30 says plainly the executive shall never exercise legislative and judicial powers, or either of them. My colleague eloquently explained much of this. This principle is not ceremonial, it is structural. It exists to prevent the consolidation of power, and preserve liberty by maintaining balanced independence, not executive oversight of the legislature. The legislature is not a subordinate agency. It is a co equal branch of government. Indeed, as my colleague said, the first among equals. It crafts laws, allocates funds, and oversees the functioning, the executive branch. Allowing an executive official to audit the legislature without its consent undermines this autonomy and disrupts, disrupts the constitutional architecture. Let me break down exactly how. First, it subverts institutional independence. The legislature must be able to freely manage, its internal operations. If the executive can audit the legislature, uninvited, it introduces hierarchy, not accountability, subjecting the legislature to executive standards of scrutiny, where scrutiny erodes the principle of co equal branches and separation of powers. Second, it disrupts constitutional checks and balances. Separation of powers divides authority, while checks and balances prevent abuse of authority. The co equal branches have mutual checks, but the tools are not the same. The legislature can investigate the executive, but the executive cannot investigate or audit the internal workings of the legislature without his consent. Instead, the executive can check the legislature2741 through vetoes of legislation, appointments, and overall management of government. Checks and balances are meant to create friction,2747 not control. Allowing2749 executive audits confuses oversight with supervision that2753 shifts our system from a horizontal power sharing to vertical subordination. And that's not shared governance, that's executive control. It is additionally problematic to have this overreach from the state auditor. This office is not within the expected arena that constitutes the normal push and pull of politics between the Executive and Legislature. When a Governor overreaches, it triggers visible institutional pushback and, public attention that constitutes the norms of2783 democratic politics. The public understands the dynamics of inter branch negotiation and conflict. Not so much the state auditor, in my view, where the public cannot typically name the occupant of the office, nor do they know its powers. Third point, audits by the executive threaten to undermine deliberation of the legislature, a point that was made earlier. Even the potential for an executive led audit can chill internal debate, prompt self censorship, and discourage dissent, against the executive. Legislators may feel that internal communications, draft proposals, or strategy discussions could be exposed under the guise of an audit. Even if the auditor claims to be reviewing only finances or processes, the possibility of expanded scrutiny can make lawmakers self censor, especially on controversial issues. Staff may be less willing to put things in writing or speak frankly, fearing audit trails. In these ways, audits can undermine a deliberative body that have the need to have frank dialogue about challenging policy decisions. Fourth and last, audits by the executive set a dangerous precedent. Even if today's audit power is limited to finances, once the precedent is set, it rarely stops there to mark and extend to communications or deliberations. And once this power is granted, it's difficult to contain and unlikely to be reversed. So at the federal level, we are experiencing an unprecedented grasp of power by the executive. Congress has allowed the executive to encroach on its authority, with respect to laws, spending, and appointments. James Madison said in Federalist 51 that ambition must be made to counteract ambition. What he meant was that the branches of government should jealously guard their powers. Today, Congress is not doing that. In the American states, especially in the state with the oldest tradition of constitutional democracy, allowing executive encroachment on legislative autonomy should be avoided at all costs. Legislatures are a bulwark of political representation, deliberation, and prevention of tyranny. I can think of few, if any, states where an Executive Branch Auditor intervenes to audit the Legislature without its consent. In most states, Legislatures maintain internal audit offices to provide transparency with independence, or they give consent to an executive officer for a limited portfolio of audits or hire an outside audit. I believe you will hear about practice in other states from an expert, from the National Council of State Legislatures. So, this is not an argument about transparency, but transparency, against transparency I should say, but transparency does not require, and should never justify, 1 branch interposing on another beyond constitutional limits. Let me speak briefly about my knowledge regarding public understanding of legislative process. Based on my experience in public opinion, and my role as co director of the UMass poll. Research shows clearly that most voters do not have the knowledge that would help evaluate proposals like ballot 1 on constitutional terms. In a 2023 survey by the University of Pennsylvania, 1 in 3 voters could not name all 3 branches of government. Question 1 sounds reasonable to the typical voter that everyone should be subject to audits. Most voters, however, have not considered the implications for deliberative representative bodies like the general court. They may not consider how separation of powers actually works. Questions about institutional design are opaque for voters with busy lives and varied experiences. So for this reason, voters tend to rely on what we call heuristics, shortcuts, when parsing constitutional implications. They default to cues like audits equal good, or transparency equals accountability, even if the actual mechanism undermines constitutional norms and practices. When a proposal is framed as a transparency reform, it tends to gain support regardless of whether it compromises institutional design. That is why constitutionally designed institutions must sometimes defend themselves, not because they are above scrutiny, or because voters lack good sense, but because structural integrity of democratic institutions cannot always be left to popular framing that leaves out important dynamics. To summarize, ballot question 1 is not a minor procedural change. It is a constitutional shift. It violates the principle of institutional independence through separation of powers and the framework of checks and balances. Allowing the executive branch to audit the legislature without consent sets a precedent that undermines the integrity3063 of co equal government. Even when motivated by a desire for transparency, it carries the risk of permanent structural damage. When The US Framers met in 1787, the Massachusetts Constitution was the most advanced and durable state constitution. It informed the structure of the federal constitution. It should continue to stand as a model of constitutional government, and to protect the Massachusetts constitution balance and power, it so carefully preserves the, the executive should not have the authority, in my view, to audit the legislature without its consent. Again, not because transparency isn't important, but because constitutional limits matter more to the integrity of representative democracy and to the prevention of tyranny. Thank you. Take your questions.
SPEAKER1 - Wow. Thank you very much. Opening questions? Senator Comfort?
SPEAKER7 - Thanks, madam chair, and thank you, professor LaRaja. The auditor has suggested that, even if she audits the legislature, we don't have to follow, the recommendations in an audit. You spoke a moment ago about a potential chilling effect, that might happen if folks were to imagine3141 that anything that they would say would be then subject to an audit. Could3145 you just expound a little bit on that? You know, if we don't have to follow it, what's the problem?
SPEAKER5 - So the so it could be used in a political sense. It could be politically weaponized, like what are you hiding? I need to see that, and they could use some, powers to seek more information, and the chilling effect is exactly as I mentioned, you are less likely3168 to put things in writing, you are less likely to exchange ideas with your staff, because the auditor might say, This is pertinent to my audit, to see how you're conducting business, and are you hiding things from the public? And I think, you know, the public needs to understand, and this is something very hard to convey, that, a deliberative process sometimes requires, people to speak frankly outside the public eye. And that's a3198 tough 1 to explain. I could talk about some ideas on that, but I do think, it is, it will have a chilling effect when the Executive can interfere and pose questions and reveal, dialogue that you're having.
SPEAKER7 - That's helpful, and I just want to say I really appreciate you naming, accountability and transparency as values that we should hold dear, even as we try to figure out the right balance here. I think that's important. Thank you.
SPEAKER1 - Senator Brownsberger.
SPEAKER3 - Thank you, Madam Chair. So, as I hear what you're saying, you're taking the conversation to a different level. So the first the first witness talked about, from a legal perspective and a textual perspective, does the constitution allow this? And the answer was no and no to even administrative audit.
Perhaps you're endorsing that legal conclusion, but taking it to another level, which is whatever, that this is actually good policy, that this was a thoughtful design, and to
prevent the executive branch from having an audited role an auditing role with respect to the legislature is good fundamental design.
So you're making a Federalist, you know, Madisonian,
how do you structure government argument? So that would argue against the legislature deciding to waive whatever constitutional concerns and consent to this audit. Would that be kind of the point?
SPEAKER5 - Yeah, I'm very concerned about institutional dynamics. You've heard from an expert on the Massachusetts Constitution. What I'm concerned is how in practice these things play out, and it is incredibly important for the legislative body to maintain its independence, with regard to their oversight. Yeah, even yeah, to waive this, your legislature the legislature would be giving up a source of power and authority that is vital to representative government. So I, you know, regardless of these constitutional issues, I'm looking back definitely to the Federalist Papers, which I just read again, with some students recently. There are some important dynamics at stake here.
SPEAKER4 - Thank you.
Thank you, madam chair. Thank you, professor. I appreciate that. We have not been reading the Federalist Papers, in the Senate. We've been busy with our ways and means hearings and trying to put together a budget, but I appreciate that somebody is, as we wrestle with this. To follow-up a little bit on senator Comerford's question in in your remarks, you know, it's been said, part of the announced scope, which, again, chair Friedman3382 had mentioned earlier has been a little bit squishy on trying to understand what the full scope is that the office of the state auditor is looking for. But administrative functions versus core legislative functions, there is no threat with administrative functions. And what I'm hearing from you and what I heard from Professor Friedman earlier as well, is that there really is no bright line. Right? Core legislative functions, you know, certainly can be defined. But even when we talk about core administrative functions, those things that are seen, and that we've been told, you know, offer no threat, that there actually is a threat to constitutionality, separation of powers that we need to that we need to understand. And I would ask you more specifically, and I think you had gone down that road talking about this chilling effect. 1 of the concerns that we have and that's been raised to us from others is that that the Office of the State Auditor doesn't just review records, right? That they could compel records, that they could go to the Judicial Branch and force, you know, certain documents to be presented from the Legislature. Can you talk a little bit about that as we kind of try to understand, you know, where the threat is on administrative functions versus court legislative functions, and the actual practical application of that, what that would mean to the legislature and, you know, separation of powers, principles?
SPEAKER5 - Well, I I agree with, the previous speaker that it's very hard to disentangle administrative from your policy making functions because you rely on staff. You've set up certain administrate administrative functions to inform your policy making. So I don't think it's a clear line. And I also think that an auditor could come in and cross that line willy nilly, back and forth, because it is kind of blurry, and using whatever prosecutorial powers that they have to obtain that information. So, I wouldn't draw that distinction at all. The legislature should have the full authority to organize themselves in any manner they want. And even if they don't pay attention, as I said earlier, if they don't pay attention to the auditor, it's still, these things can be weaponized in various ways. And that starts to lead to the chilling effect on which you all do in your deliberations. Maybe we shouldn't talk about this, or, you know, keep, you know, let's meet in the parking lot and talk about this. I mean, really crazy stuff that might have to go on.
SPEAKER4 - Do you see any, any way in which an auditor could get to a place where, and understanding, and you had mentioned it in previous speaker, this isn't, this is, this is novel territory. This has not been done in any other state, in the country. Is there any way that the auditor could ever get to a place where they audit the legislature? Is it just something that, because of separation of powers, cannot be done, or or is there something there?
SPEAKER5 - If it's in the constitution, you can do it. And it's not. But it's not in the constitution Right. As far as I know. I'm I am not an expert on the Massachusetts constitution. I've read it. Previous speaker, professor Friedman said it's not in the constitution. So and if it's in the con you might hear from a speaker later today who might talk about that. But I as far as I know, the state constitution do not have that in the constitution.
SPEAKER4 - And do you think the framers envisioned the decision being incumbent upon the legislature or the courts or a combination of both, you know, as we kind of wrestle with, okay, is this a decision that we make? Is it something that the courts decide? Obviously, you know, it's unconstitutional according to you and the previous speaker. What did the framers envision? Is it a decision for us to make, or the courts, or both?
SPEAKER5 - Well, ultimately, they would probably say, ultimately, it's the courts, but this is getting to Federalist 51. Madison expected there to be friction between the branches. So, if 1 branch tried to encroach the other, they expected the elbows to be thrown back and say, no, you can't do that. And the other branch says, yes, we can. Who adjudicates? The courts. Sometimes the legislature will win outright, because the executive will back out. But, they did envision these types of constitutional fights.
SPEAKER4 - Thank you. Thank you.
SPEAKER1 - Thank you. You you said something interesting, around the checks and balances, and you said, just wanna make sure I understand this, that The executive's check and balance is to veto, modify, send back laws that the legislature makes. And the legislature, the check and balance, on the legislature is also the ballot box.
SPEAKER3 - Yes.
SPEAKER1 - And those are the checks and balance, and the courts determine the validity and the constitutionality of the laws. That's their check and balance. Is there is that basically what it comes down to, that that's how those checks and balances work? Are there other ways that, I didn't mention or that we think about separation and how to check how each branch checks the other?
SPEAKER5 - Well, so if you're getting at let me see if I understand. So Congress, the legislatures definitely have the power to oversee the executive. That's I mean, they decide how the money is spent, they can oversee the executive that performs those functions. There's nothing that I can see in the Constitution that does it the other way, Massachusetts Constitution or the Federal Constitution.
Yeah, I mean, you know, some of this stuff is very explicit in these Constitutions about what powers they have, have, but some of it is implied, like I said. If you,3745 if the Massachusetts legislature has the power of spending, it implies all these other things. I don't see3753 anything in that constitution that says that the executive has an implied power to audit the legislature. I don't see anything there. So, if that's what you're asking, yeah. There's nothing you can even apply from those powers, from those explicit powers.
SPEAKER1 - And the ultimate check on the legislature is
SPEAKER5 - the Yeah, I mean, if the voters are not, satisfied with your work here, I mean, that is why there's frequent elections, to to hold you folks accountable.
SPEAKER4 - Thank you, Madam Chair. Professor, just 1 last question. You used the word, and it struck me when you said it, but, weaponized. It's a strong strong word that, you know, as as much as sometimes I feel like, alright. We're making this strictly academic argument, and we're going down we're going down a rabbit hole here, and, you know, your average voter, your average person is looking at saying, look. What's the threat? What is the problem here? Right? Talking about weaponizing an audit. Just an audit. Right? And you and you got into that a little bit. But interested in, you know, and you mentioned it earlier, but the parallels here between what we're seeing at a federal level and the abdication of powers from the legislature to the executive and how seemingly insignificant moments of, you know, it's just this or it's just that, could potentially be leading into major constitutional problems in this country. Could you elaborate a little bit more on you know, are we right to be concerned about that at this moment in time for a reason? That, you know, using that word weaponized is powerful, and it struck me. You know, what are the implications here of just a simple audit then turning into something more, you know, more serious, and what are the parallels that we're seeing on the federal level?
SPEAKER5 - Yeah, well, you know, there's enough friction to go around just arguing with the executive over policy, but some of what we weaponized is, arguments about processes, again, that are beyond the scope of what the auditor be. You know, we live in an age when media is fragmented, things circulate widely, and you see a lot of performative
work members of Congress,
who use many scandals, whatever you want to call it, to call attention to themselves. And I think, you know, audits can present an opportunity for doing things like that. I mean, not specifically to this auditor, but a future auditor can use this to advance their ambitions, or to embarrass, the legislature for their own purposes. So beyond the constitutional stuff, there's definitely a lot of grounds for worrying that this could be used in ways, that, advance political ambitions in ways that undermine the institution.
SPEAKER4 - Understood. And I do want to underscore too, it's not about, you know, this particular auditor or this particular office of the state auditor. For for me and I think for us throughout discussions, it's been principles over personality. It's the principles Yeah. Of an audit and and the potential, constitutional issues that we owe3958 to the voters. We owe it to them to get it right. So appreciate that. Thank you.
SPEAKER7 - Thanks, madam chair. I was actually, going in a similar direction, as senator Feeney. You you talked you opened with talking about what was happening in Washington DC, and you said that states had a particular responsibility at this moment, given the encroachment of the executive onto the powers of Congress currently in Washington. Could you talk more about that, about what you believe states, should and must be doing at this moment in our nation's history?
SPEAKER5 - Yeah, so definitely. States,
SPEAKER6 - 1
SPEAKER5 - of the beauties of the Constitution is federalism, and states, can be laboratories of democracy. They can demonstrate ways of doing things in a constitutional manner that Congress might eventually emulate. It's also states are the places where a lot of members of Congress get their first experiences. So just in that sense, the state legislatures are important for our national politics. But I do think that they, today especially, in standing up for their legislative power, they can set an example for what Congress, our national government, could and should be doing, in my view. So, Massachusetts is, as I mentioned, been doing this for a long time, and they should demonstrate to the rest of the country what it means to really work under the Constitution and have legislative body that guards its powers jealously. The way Madison envisioned, the way John Adams envisioned. So I do think there's a role for state legislation, not just Massachusetts, all of them should emphasize, at this moment we are not just going to give in to the governor, or to the bureaucracy, or to some outside organization. We are the people's representatives. I think that's essential at this moment in time.
SPEAKER7 - Thank you.
SPEAKER1 - Thank you. We very much appreciate you coming and for your testimony, and know you've come a distance, so especially appreciate it. Thank you so much, professor.
SPEAKER4 - Okay.
SPEAKER1 - Our next speaker, I believe, is, remote,
Jean Kempthorn.
This will be our final speaker on this matter. Jean Kempthorne is a retired attorney and mediator. For 30 years, she worked in the criminal justice system as a federal and state prosecutor and private post conviction defense counsel. For the first decade of her career, she practiced civil litigation at the Boston firm Hill and Barlow. She served as a member of the Massachusetts State Ethics Commission and as vice chair of the Board of Common Cause Massachusetts. Massachusetts. Miss Kempthorn is a leading advocate for reform of the Massachusetts legislature currently serving on the steering committee of the Coalition to Reform our Legislature. She was cochair of the legislative reform working group convened by progressive of Massachusetts4179 and coauthor of4181 the 2021 report titled4183 the Massachusetts legislature democracy in decline. She earned an AB from Harvard College and a JD from the University of4191 California, Berkeley School of Law. Welcome, Ms. Kempthorn.
Oops, we can't hear you.
SPEAKER5 - I think she's she is muted.
SPEAKER1 - She's muted, I believe.
Can you unmute yourself
SPEAKER8 - or do
SPEAKER1 - you need our help? You
SPEAKER4 - You have
SPEAKER1 - to do it yourself. You have to do it yourself, Okay.
SPEAKER6 - Okay. I had earlier, but it it wouldn't allow me to to do it. But okay. Thank you very much, madam chair and senators Commerford, Feeney, and Brownsberger for this opportunity to address the subcommittee and for the courtesy of4239 allowing me to appear remotely. Again, for the record, my name is Jean Kempthorn. In its report last year recommending that the legislature not enact the4249 auditors initiative petition, the majority members of the Special Joint Committee on Initiative Petitions concluded that what this initiative petition seeks to do is to transfer by statute authority explicitly vested by the Constitution and the Legislative Branch, not to the electorate, but to the executive branch, thereby violating the foundational constitutional principle of separation of powers. Now a year later, notwithstanding the legislature's opposition and the tremendous logistical hurdles inherent in the ballot initiative process, the public overwhelmingly voted to allow the state auditor to audit the legislature. Now the legislature again invokes the separation of powers doctrine as4297 a shield against the will of the people. I submit there are at least 2 problems with the majority's conclusion, and its dire predictions. First, it is not true that the audit power in the Commonwealth of Massachusetts is explicitly vested by the state constitution and the legislative branch. In fact, it is vested in the office of the state auditor. Second, it is very difficult to see how a report and recommendations, which are all the auditor can issue, would limit the power of either the voters or the legislature in any respect. To the contrary, the public having more information about how and why the legislature performs in the view of many so dismally on so many measures will restore power where it belongs. Digging into the constitutional question, it's important to keep in mind that the Massachusetts state auditor is not some rogue agency. The auditor is a constitutional officer, duly elected by the people, statewide. The state auditor role was created, it's true, by the general court in 1849. So it wasn't in John Adams or, you know, the 1780 founders. It wasn't in their mind. It was elevated to constitutional status 4 years after its creation. The state constitutional convention held in 1853 not only decided to recognize the state auditor as a constitutional officer, but chose to remove from the legislature the power of appointment of the state audit
which easily exercised and restored to those who hold, in the view of the drafters, the supreme power in our system of government. That is, with the people. This was explicitly discussed in the debate, debate of the 18 53 convention. And it was decided a hundred and 70 years ago. In Massachusetts then, the state auditor does not report to either the governor nor to the legislature, but rather is accountable directly to the people. The SJC has stated that the state auditor's office, quote, can neither be abolished by statute nor reduced in duties by legislation, close quote. Its powers can, however, be expanded by statute, so long as those enhancements do not impermissibly invade the province of other branches of government. Article 30, we've heard a lot about, of the Massachusetts Constitution. It provides, paraphrasing, that none of the 3 branches shall exercise the powers specific to the others, to the end that this may be a government of laws and not men. The separation of powers doctrine walks hand in hand with the doctrine of checks and balances, a cornerstone of our democracy. But it has never been the case that separation of powers means that there are no interbranch checks and balances. And it does not mean that the 3 branches of government operate entirely independently of each other. The SJC has stated repeatedly that separation of powers does not require 3 watertight compartments within the government.
Absolute division among the 3 governmental departments is neither possible nor always desirable, the court has noted. Each branch, to some extent, exercises executive, legislative, and judicial powers. Moreover, the system of checks and balances relies crucially on a power that exists outside the branch of government that the oversight or sanction intends to check. The legislature cannot reliably check and balance itself. Oversight must come from the outside. So separation of powers doctrine in this context is concerned with this operative question. Will an audit conducted by the state auditor's office unreasonably interfere with or encroach upon the core functions and duties of the legislature? Well, to answer that, what are the powers uniquely delegated to the legislature by the constitution that this law would dis place to the auditor. Where is the power grab specifically? The state constitution lays4594 out the powers and duties of the legislature. The power to enact laws, statutes, and ordinances, the power to tax, the police power, the power to appropriate public monies, to erect and constitute courts, and so forth. It's pretty expressed, right, in part 2 of the constitution. The amendment to chapter 11, section4618 12, enacted by the people, does not grant the state auditor any of these powers. It does not confer upon the4628 auditor the power to prescribe or strike down rules of operation, nor will the con the conduct of an audit impermissibly invade the inner sanctum of the legislature. I have found no authority holding that the legislation legislature and4645 you enjoys a constitutional right protecting its folks, records, or activities against disclosure to other branches of4653 government, for example, say, in a4655 criminal prosecution. In short, notwithstanding all the hyperbolic rhetoric about dire consequences and power grabs that were testified to in the hearing on the petition last year and again this morning, it cannot seriously be contended that an audit of the legislature is likely to interfere with our unduly approach upon any core legislative function. The office of the state auditor, sir merely serves in the words of former auditor James Gianucci as, quote, an agent, an advocate, and a catalyst for improved management and delivery of government services. The most the auditor can do is conduct an evaluation of the effectiveness and efficiency of the general court's operations, report its findings, and make recommendations. What the auditor can do is reveal her office's findings and recommendations to the public. That's all. It's I'm going to submit and suggest that it's the general court that is in significant risk of violating the Constitution's separation of powers provision in refusing to submit to an audit wholesale conducted by the state auditor. The general court, 1 may credibly contend, is frustrating and obstructing the performance of a core function of a constitutional executive branch office and the will of the people in examining whether the laws are faithfully executed, whether public monies are being wasted or misdirected, and whether government is effective and responsive to the people. The irony is that the general court has overreached in the same way it now complains the state auditor is doing. The house and senate committees on post audit and oversight are empowered to conduct performance audits of all executive agencies and departments, as well as the judicial branch. For the particular purpose of making an appraisal or evaluation of the efficiency of operations, the effectiveness of programs, and the faithfulness of administrative compliance with the intent of legislation and administrative regulations affecting a specified agency of the Commonwealth. Close quote. The enabling statute, chapter 3, section 63 and 64, also empowers the committees to obtain access to books and records, to compel witnesses to testify, and so forth. If this is not an encroachment on the separate power and a core function of the executive branch and the judicial branch to implement and execute the laws and perform its other duties as it sees fit. And so the executive and judicial branches to control their internal operations, that it is difficult to see how the legislature can credibly heard to advance the arguments that an audit of the legislature, any audit by a constitutional office with the inherent power to conduct audits under the state constitution is such an encroachment. I am not, by the way, making the argument that the House and Senate post audit and oversight committees activities are unconstitutional. I will contend, however, that the legislature's amendment to house rule 85 a, providing that the state auditor at the request of the house must then hire a neutral private firm for the house to employ to conduct a financial audit of the house is clearly an impermissible encroachment of the state auditor's core constitutional function and on its operations. The legislature has no more power to fire the state auditor nor to strip it of its core functions and inherent authority, nor to direct how that office proceeds with its work, then the state auditor has the power to direct the operations of the legislature. It's inconceivable that a chamber of the legislation legislature can, by simple amendment to its internal rules, undermine the constitutional and statutory function of the state auditor and subvert the will of the people. I'd like to say that it hasn't been discussed, but it it it has been raised, you know, outside this hearing today. And that's whether the legislature should request an opinion from the justices of the SJC prior to the commencement of the audit. While part 2, chapter 3, article 2 of Massachusetts constitution affords each branch of the legislature, as well as the governor and the council, the authority to require the opinions of the justices upon important questions of law and upon solemn occasions. Article 3 prevents the SJC from impining on the constitutionality or the construction of an existing statute. Abstract hypotheticals that we've talked about this morning are not4952 solemn occasions. They do not4954 pose important questions of law, even permitting the court to render an advisory opinion. Even if the court did render an opinion in such an inchoate context,4964 it would in all likelihood not be binding. The constitutionality of the audit can only be presented to the SJC in the context of regular litigation over specific actions or refusals to take specific actions. This is not a case where the legislature is entertaining serious doubts as to its power and authority to take certain action. That could be an occasion for an advisory opinion. The situation is different. What the legislature is trying to do or is contemplating doing is obstructing another branch of government from taking action authorized by statute. The real question I submit is this, should the audit take place unhindered? The answer I submit is clear. Over 71% of the public voted in favor of clarifying that the legislature is subject to audit by the office of the special of the, state auditor. In light of that overwhelming mandate, the legislature, I suggest, should be less focused on abstract legalistic theory and far more concerned about the crisis of public confidence in this institution. The wise reaction to that crisis of confidence is not to throw more alligators in the moat and reinforce the walls of the citadel, but to allow the audit to proceed unhindered and to commit to far greater transparency in the legislature's operations. A frontal challenge to the will of the people in this historical context is a mistake. It gravely misreads this moment in history when democratic institutions are under attack both here at home and abroad. The legislature, at least at the outset, should yield to the will of the supreme power in this commonwealth, which is the people. Here is a radical suggestion. Assistance in identifying areas of performance and operational improvement, not only from the state auditor, but also say from a revived legislative research bureau and a fiscal analysis office should be welcomed rather than resisted. Both could be seen as resources to enable the legislature to do better work on behalf of the public it's supposed to serve. Thank you again for inviting me to address you.
SPEAKER1 - Thank you, miss Kempthorn.
SPEAKER6 - Questions?
SPEAKER1 - Senator Brown's Burger.
SPEAKER3 - Thank you very much. Are there, are there any areas at all or anything that the legislature could ask that you would consider to be outside the powers of the auditor under the constitution?
SPEAKER6 - Again, I think that's a hypothetical senator. I think it's conceivable that there would be questions and activities that would be overly intrusive, but I think that that is would never be grounds to say no audit at all. In other words, what I think the the auditor is empowered to do are the inherent powers of an auditor. And,
what I think this legislature believes the inherent powers of an auditor are is imbued in section 12. So that's what I think, you know, the auditor gets to do. I think chapter 3, sections 63 and 64 also indicate what this legislature believes are the inherent or appropriate powers of an auditor. And I think you would look to that. So interestingly
SPEAKER3 - I'm sorry. Just to be clear, you're saying we should the legislature should look to those are statutory provisions that we should look to?
SPEAKER6 - Those are what I'm saying is those those statutory provisions which
guide you in what are the inherent powers of an auditor. I'm no authority in inherent powers of an auditor, but I think that that would be where to start. I think that, obviously, you're going to hear from experts
in generally accepted standards of of auditing. Those don't have I I'm not aware of of whether those have the power of law. But what I think is really the question theoretically is when the state auditor was made a constitutional officer And when the SJC says that the powers of the state auditor cannot be reduced, they can be enhanced,
you have to look at what are those inherent powers.
SPEAKER3 - Okay. So we gotta figure that out is what you're saying to us.
SPEAKER6 - I don't think you do it at the get go. I think you do it as particular things. If things strike you as an egregious overreach, that would be
the time to seek, to seek some sort of, expression
SPEAKER8 - of structure.
SPEAKER6 - It doesn't a potential for that doesn't give rise to a conclusion that no product is possible.
SPEAKER3 - So at at some later point when certain requests go to a certain point that we feel very uncomfortable with or feel they are inappropriate, that's when we should seek an advisory opinion?
SPEAKER6 - If or negotiate or seek an opinion of the attorney general as your counsel, etcetera. Yes. In other words,5318 this should be it should be presented in the context of a specific dispute.
SPEAKER3 - Okay. So there isn't a point, but there is a point where we'd need5326 to get some outside advice, and the SJC5328 might be the authority to give it to us.5330
SPEAKER6 - There may or may not be, it depends how it proceeds.
SPEAKER3 - Okay. Did you do you have a view on the statutory construction as it, as to
the temporal scope of the audit authorized by the question?
SPEAKER6 - I I I heard that argument and, instruct me as, there's nothing ex post facto about this. In other words, the audit would be conducted at the time the audit is conducted. And the audit would be looking at the activities of the, you know, whatever. It would be doing whatever the audit does. And there's no issue of ex post facto because you're not talking about,
changing or punishing or doing anything with respect to past activities. It would it would it would simply inform the the recommendations.
I don't even know how it would really be workable to say that the auditor can't look at past practice.
SPEAKER3 - Thank you very much.
SPEAKER6 - Thank you.
SPEAKER7 - Miss Kempthorn, thank you so much for your testimony. Very, very grateful. You had said, during your testimony that accountability must come from the outside. And I wonder if you and you heard earlier that there was a discussion about the voters being the ultimate check on the legislature. Is that something that you agree with generally?
SPEAKER6 - That's that's only 1. I mean, obviously, the executive has the veto power, and the courts have another check and balance power, which is to declare a statute unconstitutional. There are other ways, for example, where the executive can check and balance. And that is, if the legislature, a legislator or whatever, commit some crime in connection with, with the performance of their duties. Certainly, the speech and debate clause doesn't, doesn't prevent a prosecution for bribery, for example. So there are various checks and powers and, of course, the people at the electoral box. But that presumes that the people are in a position to actually evaluate what their legislators have done.
SPEAKER7 - I agree. I agree. I I do think that an informed electorate is essential for democracy. I I do think that that's 1 of the reasons that the house and the senate have really moved forward on a robust rules package, you know, so that our work is more visible to the voters. Thank you so much.
SPEAKER6 - Thank you.
SPEAKER4 - Thank you, madam chair. Thank you, miss Kempthorne, for your frame of reference and your perspective. We really appreciate, your testimony this morning and taking the time out to do so. You had mentioned a, the the the public confidence, I think, is the the phrase you5549 used. Right? And,
wondering if you believe that the legislatures,
that that, you know, our responsibility essentially to to, meet the the confidence of the public, does that outweigh our responsibility to make sure that any laws that we pass considered to be will rise to, meet constitutional muster. You know, this is something, again, that I mentioned earlier on kind of this values conflict. Right? That we saw the voters, and you had mentioned 71, 70 2 percent of voters voted for this law. Certainly, we spend every day, trying to be accountable to the voters. But how do you balance that? Should we be accountable strictly to the voters in public confidence, or do we have an obligation as well to make sure that everything that we do passes constitutional muster,5604 or do we just do it and then figure it out later?
SPEAKER6 - So you do not need to, determine that everything that you do, is
that you are never ceding any constitutional power. You have in you have the right to exercise discretion. You have the right, as the legislature has done in the past, to agree to allow yourself to be audited. In other words, there isn't any great virtue on standing on your rights in the face of a crisis of public confidence. What so in other words, it's a false conflict because you have discretion. It has been exercised over a hundred times in the past according to your view of it now, which is that,5661 oh, we were audited by consent. Well, what was wrong with doing that? What's wrong5667 with doing that now when the legislature has come under attack from5671 so many, sources, so many directions? Why not say, yes, we we're not going to stand on what we think is a theoretical, right we have to, shut the5687 doors here. Instead, we're going to allow an audit until such time as we think that5693 it's a bridge too far, that it's just too much. That's what I would suggest is the way to think about this. Why not conduct the allow the audit to be conducted? Why not?
SPEAKER4 - And, so I would say, number 1, I'm trying not to conflate, you know, certainly all of our different perspectives on transparency and openness and accountability and something that, you know, the members of this subcommittee certainly, have been working on in their tenure tenure here in the in the senate. Try not to conflate that with a very discreet question of, does the proposed audit violate the constitution? And if so, then I would say, you know, not just the perspective that you just raised, which is ceding constitutional power, ceding our power to another branch, but but probably more importantly, are we knowingly violating the constitution based on information that we have been told and received? And and that is the question that I think we need to answer for our colleagues in the senate, which is if you take this action to, you know and I think you used the word comply or volunteer for an audit. Are you, as a legislator, who just months ago raised their hand to, you know, uphold the constitution or commonwealth, are you knowingly violating that in the interest of political expediency and making sure that the voters understand that, you know, we are accountable only to them. So I think that's the that's the question. I don't know if you have any more thoughts on that. I do have another follow-up as well.
SPEAKER6 - I I if if I could, I don't think there's any such risks. Okay. You you and I have no provision by allowing this. And the SJP has said that that the power to stay on earth can be enhanced.
So I I I'm not just talking off the top of my head. I'm talking based on on an SDHC, statement that decide the case.
SPEAKER4 - Powers of the audit can be enhanced by the legislature and only the legislature? Okay.
SPEAKER6 - Oh, I'd say only the legislature. In other words, there I I would submit there are inherent powers which cannot be stripped by the legislature, and that that same case says it includes the MTA case, MTA case. Like the citation, I believe I have it. 430Mass791, I believe is the case.
5854 I'm5854 I'm sorry, senator. Did you wanna follow-up on that, you said? No.
SPEAKER4 - No. That's okay. I appreciate that citation.
SPEAKER6 - And it not exactly accurate, I'll get back to No. Oh, here it is. 2,000 cases.
SPEAKER4 - Okay. Understood. That's helpful. And then,
prior, senators were were kinda asking questions about, you know, do you see any sort5884 of guardrails, any sort of bright lines, to to an audit? And I think you had said, if I understand correctly, you know, it's whatever they are, it's no reason, to just say no audit that, you know, you would figure this out kind of as you go along. And if there's something that was so egregious in our view that we would then seek an advisory opinion. And I the question I have for you is, do you see, in your opinion, any bright lines when it comes to administrative functions versus core legislative functions? We had asked the previous 2 speakers, you know, is that defined? How do you5921 define that? What are you what are your your opinions on that? And and as we try and understand what a potential scope would be of of an audit, from the OSA, from the office of the state auditor, are there any any sort of bright lines that you see? Are there anything any anything that we should consider that that delve into that territory, which you said may be so egregious, then we have to go to the SAC for an opinion?
SPEAKER6 - Yes. I I would think that if, the state auditor were to use, the powers of the office to pursue, you know, private litigation, that would be way off the rails. If it if if if the state auditor were to engage in what essentially
a force,
a cause of action that is prohibited under the speech and debate clause, that would clearly be a guardrail.
You know, the specter of repetitive, harassing, questions, that was raised by, I think it was professor Friedman. I mean, that would be a place where you might interpose an objection and then leave it to the state auditor to seek assistance from the court, but you could oppose it as harassing and as actually unduly and interfering with the work of the legislature. But I do not think that an administrative versus legislative divide is workable because I don't know how you would define those things. Let me give an example. Let's say, there is, undoubtedly, you know, a a chapter 3 section 55 a recodification council. It is to my knowledge or to my understanding, not filled, maybe has never been filled. I'm not sure about that. I think that's a question the state auditor could ask. Is there a recodification council? When was there a recodification council? To anticipate senator Friedman's possible question about retroactivity.
I don't know that you couldn't that that that office couldn't ask that. Is the legislature itself complying with its own laws? Why isn't that legitimate and in the public interest to know that you've enacted a law, haven't fulfilled that mandate that you imposed upon yourselves? The public has a right to know that. I don't think that's illegitimate. And and and that's why I have difficulty with these questions of, can we look at past practice? Can we can the auditor ask that question? Has there ever been a recodification council? How are you doing recodification? Those are questions I think are clearly in the public interest. So that's why I say these these abstract questions that you're you're asking really are not helpful. So I wanna be as concrete as possible. I think you let the ship sail, and then you6117 figure out whether you need to change direction.
SPEAKER4 - Thank you. Helpful in understanding your your perspective on it. I would say that the questions, certainly, that I'm asking and I believe my colleagues aren't abstract at all, that they come from information that we've received, at various times from the office of the state auditor or that have been, made publicly. Certainly, the questions that I'm asking on on on scope and whether or not there's any bright lines came directly from the initial statement from the office of the state auditor on expected scope of a legislative audit. It was prior to the ballot initiative under full disclosure. However, we've seen statement after statement, communication after communication in which the scope was not so narrowly defined so that we have to ask those legitimate, I think, very, specific questions, not abstract. Right? This is about the practical application of what we have seen from the state auditor, including an audit on an equitable mode of making laws. Presumably, you would feel that and and I I don't know when you can answer this, but is that something that would be beyond the bounds? Right? What how do you define equitable mode of making laws? Is that a deliberative legislative function or is that administrative function?
SPEAKER6 - Well, again, you know, it's it's I think this is a semantic thing because I think you're trying to come up with a general principle. What I was saying is you have to get down on the feet. And and and this is maybe a big difference between, me as a a prosecutor, defense lawyer, and, you know, a workday lawyer, as opposed to a theorist because to me, the question of this something in the ministry versus is it related to deliberations or core functions, that is an abstract category. I don't mean it as a jargon. I'm just saying you
I
think it's you have to do that, by getting down on the reading. I think the courts will need you to do so because they can't really open line.
SPEAKER4 - Perfect. I appreciate that. And I think it's you know, sometimes we every all of us, we get into our kinda own silos and and, you know, you come from perspective from an attorney. And, certainly, as a legislator, I'm somebody that, you know, has a way of, a thought process when it comes to passing laws and the things that we do. You know, you really get into the specifics on, you know, when we deal with this firearms legislation. What is the practical application of this? Is this gonna be able to be enforced at a municipal level? Can we get into the details on it? So I think that's the way we think about these things, and rightfully so. I think the people expect us to do that work. Right? I mean, we heard earlier about, you know, as as the voters of the Commonwealth have busy lives, we are we are accountable to them. They elect us to actually do this kind of work in thinking about these things and getting granular. And and I I would say that just to kinda follow-up on that, you know, things like committee deliberations. I fear that if, we allow an audit that looks at committee deliberations, now you're looking at a a very much a core legislative function in which negotiations happen, discussions happen, you know, which bills make it to the floor, which amendments actually get brought up for debate. And we've been told at various times, that that is, could be included in an audit, number 1. And number 2, in in very specific questions that we've asked, would you would you, commit to to to to telling us that that is not gonna be part of an audit. Right? That could make our conversations easier, but they haven't been eliminated. So the final question I have for you on that, and you had mentioned a few times and and just again talking about, you know, getting an opinion of the of the SJC. What is the what is the the trigger mechanism for that? Is that something in your understanding that the legislature could just say, hey. We're having a tough time, you know, dealing with this question. We have a lot of these in in, you know, in in in your perspective, kinda abstract theories that we're wrestling with or maybe more more specific questions. Can you help us, SJC, decide? Or is there something more stringent than that that we need to actually, you know, some work that needs to happen before we're able to go to the SJC and get an advisory on these issues?
SPEAKER6 - Yes. I mean, it's right in the constitution. It has to be a solemn occasion, and it has to be, an important question of law. Not just an important question of law, but also a solemn occasion. In other words, it's usually used when you, the legislature, are about to take an action and you have, serious doubts that your own action is, constitutional. Here, you're really looking for a bar to another constitutional officer taking action, and you want it to be done prospectively. That, the court will, in all likelihood, say is not a solemn occasion.
SPEAKER4 - Appreciate that. Thank you.
SPEAKER1 - Thank you so much. I have just have a clarifying question. And we have no this this I just wanna say that this hearing is not about stripping the auditors, you know, authority or anything like that, but I just wanna understand something that you said.
The office of the state auditor was, created by statute, and yet the SJC has ruled that it cannot be stripped or changed it can be enhanced, but it can't be, reduced. How does that work when something is a statute created by a statute and nothing in the statute says that it can't be changed or reduced or anything. How does how did I understand that correctly, what you were saying?
SPEAKER6 - Yes. I believe that's, what the case law is. And and the reason is is that the state auditor was removed from your purview in the 1855 redo of the state constitution. It was decided that the legislature should not have such power over the state auditor. So what the anomaly is is that there already was an enabling statute. I think the way you have to think about it, and this is what I would argue, is that that sort of set the baseline for what the auditor can do. And it informs what are the inherent powers of an auditor. You really need to look at what is inherent in the office of the state auditor. So that original enabling legislation informs that query about what is the what are the inherent powers. Now can that evolve over time, etcetera? These are 5 questions. I can't say that, I mean, it would be subject to litigation, but that kind of litigation would be best presented in the weeds in a specific factual dispute that sharply, articulates it. Or it would be, say, presented. Now here would be a situation where an advisory question might be appropriate, where you tried to change, section 11 sorry, chapter 11, section 12, in order to reduce the ledge the the auditor's powers, where you actually enacted a law. Let's let's say you were to strip the you were to, you know, file bill to strip chapter 2 50. And that might present a question because that would be an effort to reduce the powers as set forth in the statute. And you'd have to then it would raise the question of of of, is that a permissible? Is that permissible with the fact that this is a constitutional office that was specifically rested from your control in the 18 fifties?
SPEAKER1 - Thank you. Senator Comforter, did you have a question for
SPEAKER5 - you? I don't I don't know
SPEAKER3 - how the statutes evolved. Has there have there been amendments to the statute, since 1850?
SPEAKER6 - I I have not had time to research that. It's an interesting question, senator.
SPEAKER3 - But you wouldn't argue that amendments post 1850 somehow were then automatically incorporated into the constitutional concepts of that date?
SPEAKER6 - Again, I I unless there are involving notions of what's inherent. I mean, a question that's occurred to me is in 1922, when the legislature removed some core functions of the state auditor and put them under the office of the comptroller over which it the legislature now could exercise6685 some control.
Was that constitutional? Strikes me there's a strong argument it wasn't.
SPEAKER3 - So just to come back to a couple of questions that senator Feeney was asking, if I may. So it's not we do have before us, you know, a set of requests that the auditor made in 2024, '20 '20 '3. I guess it's 2024, and so these aren't really abstract hypotheticals.
1 of them would be whether and to what extent legislative services are being equitably provided to all members and staff by Legislative Services Bureau or equivalent. Now would that be a question for the auditor, or do you or is that something we should somehow post postpone into the future?
SPEAKER6 - You could certainly push back on that, couldn't you? Asking for greater clarification and interposing an objection, just like 1 would do in in in the course of of litigation involving, claims of privilege. You could you could have interposed the privilege and and say, you know, seeking greater clarification and then interposing a privilege if you think there's 1 that exists.
SPEAKER3 - Were I to run through a list of these questions of that the the auditors asked, you would that would be your answer basically to each 1, which would be you could you can interpose an objection, you can then litigate that, etcetera.
SPEAKER6 - Or or just refuse, and then then it would be incumbent on the state auditor to try to enforce it. Right? And then that would present the question start with.
SPEAKER3 - So then you so so what what that then contemplates is an extended course of litigation as various questions are asked and we decide or decide not to go along with them and so forth?
SPEAKER6 - That's that's right. That's what it's gonna entail is is is a review of the questions and then deciding which ones you think are, you know, over over the line.
SPEAKER3 - So just to bring it back to the sort of national context, and, of course, basically all legislatures, I6829 mean, Congress is certainly under assault for transparency issues, so if if Elon Musk were to6835 propose to audit Congress and to say, you know, give me access to your data systems and my whiz kids are gonna identify some issues for your improvement, would that be something you'd advise Congress to consent to? No. And why how is that different from this?
SPEAKER6 - Because Elon Musk is not the state auditor. Elon Musk has no authority.
SPEAKER3 - But And
SPEAKER6 - it it clearly is an intrusion on the functioning the core functioning of congress. It's also unduly burdensome. In other words, it can be
SPEAKER7 - Okay. I really appreciate this discussion. I I had a question about, in the 2 previous speakers, we heard about a a chilling effect on the core functions of the legislature. Should, well, we heard both that it was difficult to detangle administrative versus core function, and that that was 1 thing we heard. And the second thing we heard was, that it was it could have a potential chilling effect on the work of the legislator, the deliberative body to continue its core functions. Again, we're elected to do these core functions should, should the audit should the auditor seek to to actually, audit the core functions of the legislature. So, okay. I really appreciate this discussion. I I had a question about, in the 2 previous speakers, we heard about a a chilling effect on the core functions of the legislature, should, well, we heard both that it was difficult to detangle administrative versus core function, and that that was 1 thing we heard. And the second thing we heard was, that it was it could have a potential chilling effect on the work of the legislator, the deliberative body to continue its core functions. Again, we're elected to do these core functions Should, should the audit should the auditor seek to to actually, audit the core functions
SPEAKER6 - of the
SPEAKER7 - legislature. So is that something that resonates with you, as a concern, the ability of the legislature? So we're elected by the people to do this work, and senator Feeney talked about, you know, really, wrestling with the constitutionality, because, in fact, we are elected by the people to uphold the constitution. And do you think that there's a possibility for a chilling effect on our work, should as we get down into the weeds, as you suggest, which I think is a good metaphor,
we we become entangled in such a way that it it prevents us from doing this work.
SPEAKER6 - I really think that,
if it is chilling, hopefully what it does is chill the legislature into a higher level of performance that it would spur you to look harder at the way you do business. And it would, in fact, serve the public, which I think the public is telling you overwhelmingly.
SPEAKER7 - That's helpful. I do think the legislature has heard the public's call for transparency. Again, I think that's different than what we're talking about right here. But I do think it is again embodied in the rules that both branches passed, which are, you know, I think setting setting us on the right path toward transparency and accountability.
SPEAKER6 - Let me just say that this is not only about transparency. It's about effectiveness. It's about efficiency. I mean, I I I have seen along with other people ability
But with it went the baby along with the bathroom. And now the legislature is, in the view of many of you may, insufficiently resourced. Rank and file legislators are insufficiently resourced. On performance audit appropriately done can highlight those and make suggestions to you on what needs to be done to improve the way you operate. It's not just transparency for transparency's sake. It's making the legislature work better.
SPEAKER8 - I think you
SPEAKER6 - get another discretion as to what you
SPEAKER8 - change, what
SPEAKER6 - you chose
SPEAKER1 - Okay.
SPEAKER4 - Thank you, madam chairman. Again, miss Kempton, thank you for spending so much time on this. I really do appreciate, your perspective on this and your your additional work on on transparency and some of the other things you recommended in the past. So I just don't want it to go unstated that we really do appreciate you here. Just 2 real quick ones, and I I I know we have to move on in the interest of time. 1 of the things that, you know, obviously, as I mentioned earlier, this is kind of a novel concept in having the, power vested in the in the office of of, the state auditor, to to audit a legislature. And we've seen in other jurisdictions, I think it was Florida, perhaps, where they opened up, you know, their public records and and and open meetings law down there, and they said, look, for this to apply to the legislature, it would be appropriate to amend the Constitution to to do that. Do you think that that this should have been a constitutional, amendment as opposed to, you know, a valid question on the, on the statute? Would that have been more appropriate in this in this instance?
SPEAKER6 - I do not believe so because as I argued in my, original statement, I do not see that the state auditor, can divest you of any of your powers, not a single 1. It not only is it not an undue encroachment, there's no encroachment.
In No. I don't believe it's necessary.
SPEAKER4 - Alright. Thank you. And understanding from from your your, answer to the last question, you talked about, performance at a legislature. 1 of the things I've been asking a lot of people that have come to to me certainly over the the last few months on this, how do you effectively judge performance of a legislative body? Isn't that power that should be within the the the the, you know, the the voters? Don't they judge the effectiveness and efficiency and, performance of a legislature every 2 years at the ballot box, or is that something that you believe should be judged elsewhere? And how do you define that?
SPEAKER8 - Only the
SPEAKER6 - the voters are able to assess that. A state auditor would help them exercise that check and balance. So here here's an objective measure. And I don't know, what the legislature does this, but what I'm told is it does not. The SJC will rule, as it did in the upskirting case, that the statute has an obvious flaw, clear flaw. 10 years go by, and that flaw is not fixed. Now I'm not pretend I'm not making up that it's a flaw. It's a flaw, and it's not fixed. That's objective. I mean, the state auditor could inform the public that the legislature does not do a very good job of going back and cleaning up its errors. The the public doesn't understand, except specific stakeholders do understand. When a statute fails of its purpose, When a statute is so hard to understand or is internally inconsistent, then it leads to a ton of litigation, failed prosecutions, failed investigations because the work of the legislature has been delegated to special interests and is the the quality control is not there. That the public would do well to understand.
SPEAKER4 - That that's helpful.
SPEAKER6 - Thank you so much.
SPEAKER1 - Thank you then. Thank you so much, miss Kemp Thorne, and and thank you, for the discussion. I don't mean to cut it off. I'm sure we could get very much, go a lot further in the weeds as as, we've mentioned several times. We do have 3 more speakers and we are, behind time. So thank you. Really, truly appreciate your willingness to, come speak with us. And I appreciate the honor. Thank you. Okay. We are now going to hear from invited testifiers on the matter of government auditing standards. And just for the benefit of, the folks who have, been willing to testify, we are a little bit behind, so, we apologize for that. So, the first of this matter on this matter, we will hear virtually from Megan McClure. Megan McClure is a senior policy specialist in the legislative staff services program at the National Conference of State Legislatures, NCSL. In her role, she focuses on program evaluation and performance audit office staffing and operations and coordinates peer review for legislative program evaluation and performance audit offices. She is 1 of the leading experts in the area7478 of legislative auditing programs. Megan also focuses on leadership offices, caucuses, and legislative civics education programs. She is cohost and lead producer of
SPEAKER6 - Greetings and
SPEAKER9 - many Greetings and many thanks madam chair and the senate subcommittee members for this opportunity. As stated, my name is Megan McClure with NCSL. And NCSL represents legislatures in the states and territories and commonwealths of The US with the mission to advance effectiveness, independence, and integrity, and to foster interstate cooperation, and facilitate the exchange of information among legislatures. I'm before you today to testify in liaison to the National Legislative Program Evaluation Society or NLPES, which is the professional society society, that's composed of state staff, and legislatures who perform program evaluation and performance audit. As the NCSLE is on to NLPS, it's my role to research and build expertise in the functions and operations of these offices and the staff who are an integral component of legislative oversight work.
I'd like to really quickly just take a moment to talk about separation of powers and legislative authority and independence. The7567 folks before me have already covered this very7569 thoroughly, but our founding fathers created a system of government based on 3 coequal branches, the legislative, executive, and judicial. They established a a system of checks and balances to guard against any specific arm of government, assuming excessive power. And the separation of powers doctrine is 1 of the major tenants of American democracy. As we at NCSL like to say, American legislatures are like snowflakes. No 2 are alike. But that being said, 1 commonality that we see across all US states is the inclusion in their constitutions of language about separation of powers and legislative authority over the branches, rules, processes, and procedures. As you can see in the above cited portions of the Massachusetts constitution, the separation of powers between the 3 branches is laid out along with the ability of both chambers to choose their own leader, appoint their own officers, and determine their own rule of proceedings. An integral part of the checks and balances inherent in American governmental structure is legislative oversight of executive agencies, offices, programs, and quasi governmental entities who receive or administer state funds. This function can and is executed via a variety of means and entities, but all state legislatures perform some sort of legislative oversight. This oversight is meant to ensure accountability in the use of public resources and government authority that has been allocated by the legislatures. There are a variety of ways that legislative oversight happens in the states. I will be focusing on financial audit and program evaluation or performance audit. Please see the handout that I provided for additional methods of legislative oversight that are employed by legislatures.
Auditing standards constitute the criteria or yardstick against which the quality of audit results are evaluated. In every organization or institution, standards are developed by regulatory bodies specific to that institution or organization, and these standards must be adhered to. While there are a variety of standards that can be used in audit engagement and state government, the generally accepted government auditing standards, otherwise known as Gaggis or Yellow Book, are developed by the Federal Government Accountability Office and are used by the majority of state auditing entities. Most states adhere strictly to Yellow Book, while others have their own standards and procedures that are then supplemented by yellow book or other auditing standards. For more details, chapter 1.12 of the yellow book lays out the many types of potential users and is included in my handout. Going back to the snowflake analogy, it's difficult to make sweeping generalizations about the structure and how legislatures perform oversight and how the branches interact and overlap. The following information reflects my best efforts at categorizing how auditing is structured in the states and highlighting anomalies and similarities. How each state approaches auditing and oversight is unique to that state. However, the structures and who performs the work can basically be grouped according to how the auditor or director is selected, and therefore, the branch of government in which the office is housed. I'm gonna use the term auditors. I continue, but please note that the titles of the penultimate leader of audit and evaluation offices in the states can vary. In 22 states, the auditor is an elected official. In 4 states, the auditor is appointed by the executive branch. In 3 states, the executive appoints and the legislative confirms the auditor. And in 29 states, the auditor is appointed either by chamber leadership, the legislature as a whole, or by a joint legislative committee. Many states have auditing office in offices in both the legislative branch and the executive branch. A table of which offices fall into these categories is included with my handout. Often, executive branch auditors are the ones to perform statewide comprehensive financial reviews and single audits, which can involve certain records and accounts held within the legislative branch. If a generalization is to be made as far as the work often undertaken by executive branch auditors versus legislative, executive auditors are less likely to perform program audit or performance evaluation and tend to focus on financial and compliance audits. Also, executive and legislative auditors tend to have different scopes of authority such as in Minnesota, where the executive branch office of the state auditor has jurisdiction over the local units of government, while the legislative auditor audits units of the state government. I would like to point to a couple unique situations of cooperation between executive branch audit authorities and the legislative branch. In Oregon, the executive branch state auditor does audits and performance evaluations at the request and under the supervision of the joint legislative oversight committee7892 as there is no legislative branch auditor in Oregon. Kentucky is another state7898 where the executive branch auditor performs7900 audits at the request and under the supervision of a joint legislative committee.
The majority of legislative branch auditors and evaluators report and take audit requests from a legislative committee. Some report and take direction from legislative leadership. Others are completely independent and decide themselves which audits to perform and publish, and7925 some audits are dictated by statute7927 such as sunset provisions or regular auditing schedules.7931 See the handout for examples of states with sunset and regular schedules. Executive branch auditors usually are directed by a report to the governor, state financial authority, or other member of the executive cabinet, but their work can also be guided, can also be independent and guided by statute.
In my research, I have found a single instance of a legislature being audited by an executive branch auditor regardless of cooperation and consent of the legislature. Section 1 1 3 of the Mississippi constitution states the auditor shall, within 60 days after the adjournment of the legislature, prepare and publish a full statement of all money expended as such sessions.
SPEAKER10 - See the
SPEAKER9 - handout for full text. I would also like to offer a couple examples where executive branch auditors technically have the authority to audit the legislature in their state. In Utah, the executive branch state auditor has the authority to review anything related to the use of public funds, and their work includes completing the state single audit and compiling the consolidated financial review. While the office of the legislative auditor general does more specialty work reporting on performance and efficiency based upon legislative requests and does not perform compliance or financial audit. The state auditor does audit the legislative branch via selected financial testing in the consolidated financial review. Also, because the legislature uses the statewide payment system, they are subject to sampling of expenditure report review. In Washington state in 02/2005, initiative 900 was passed explicitly adding both legislative and judicial branches to the state auditor's authority. The joint legislative audit, and review committee also has the same scope of authority. However, the matter of executive audit of the legislative branch or vice versa has never come to pass, and any instances of executive and legislative crossover have been amicably mediated between the 2 branches. While there are instances of a state auditor, such as the Connecticut auditors of public accounts performing an, performance auditing a legislative entity, in this case, the legislative management committee, the 2 bipartisan audit auditors are appointed by the legislature and are therefore situated in the legislative branch, and this maintains that separation of powers. The auditors also include a disclaimer8090 about the potential for conflict of interest and measures taken to mitigate that risk. The most common method I have found of legislatures being audited is by contracting with an outside independent firm of certified public accountants to complete annual or biannual financial audits. This method is relied upon to maintain separation of powers and avoid conflict of interest. In Minnesota, both chambers are required to contract either with the state auditor or a CPA for audit at least biannually. And while the state auditor is an option for these audits, they traditionally have been done by independent CPA firms. Also, the Minnesota legislative coordinating committee will not require to submits to it by annual audit. These audits have been limited to financial audits and are performed using yellow book standards. In New York, according to the New York internal control act, each chamber's leader is required to develop and implement internal controls and to request proposals for outside independent CPAs to audit their respective chamber at least once every 3 years and are required to use yellow book. And and, there in Massachusetts, in the8166 joint rule section 34, the committees on rules of both chambers shall shall provide that an outside independent audit of joint financial accounts be conducted by a CPA at least at the end of every other fiscal year. Each chamber also has rules requiring an annual fiscal year audit to be performed by a CPA and post on the general court website and notify the comptroller, inspector general, and state auditor. These requirements can be found in senate rule 13 c and house rule 85 a. In conclusion, auditing and oversight is a key principle of the checks and balances of American government and must be accomplished within the restrictions necessary to maintain separation of powers. Executive branch audits of rules, processes, and procedures of the legislative branch have the potential to compromise the legislative branch's authority to determine its own structure, processes, and rules. And while there are instances of executive auditors auditing the legislature, the ability of these audits to be completed has been mainly determined by the relationship between the 2 branches and are in all known cases restricted to the realm of financial audits and not program evaluation or performance audit. Thank you, madam chair and senate subcommittee members. I appreciate your time and look forward to any questions you may have.
SPEAKER1 - Thank you, miss McClure. That was, very thorough. We appreciate it. Questions? Senator Commerford.
SPEAKER7 - Thank you, madam chair. Thanks, miss McClure, very much. You also had a great economy of language, which I really appreciate, and thank you for all your, your research that you did and your materials. So you you gave us a a scope of The US states. Right? States across The United States. So for states like Massachusetts where we hire a CPA to perform a financial audit, and states, you know,8299 states again, similar states to Massachusetts.8301 How do states like ours satisfy a public which is hungry for the kind of quality information about our financial business. How how is that done? How do we maintain these standards? How is the public satisfied with the transparency? How does that look across The United States?
SPEAKER9 - I I'm not sure exactly how in the states that that8329 use outside CPAs to do their audit, how8333 satisfied their their constituents and their citizens are with that8337 level of transparency and information. But I I really can just say that8343 that tends to be how8345 I see this happening in The States across The US if it happens. I am happy to, you know, dig deeper and see if I can't find any measures of how there's, you know, looking at the satisfaction of constituents with the level pool of information provided.
SPEAKER7 - Thank you very much.
SPEAKER3 - Thank you very much. No questions. Thank
SPEAKER1 - you. Senator Feeney.
SPEAKER4 - Thank you, madam chair. And, thank you, mister McClure. I really appreciate that. That was very, very informative, and thank you for the work that you do at at NCSL. We rely on NCSL a lot for the work that we do. So you would mention and I think you you got into this, but just wanted to to make sure I was clear on it. In states where the auditors do audit the legislature and you and it kinda varies on on what they audit what they audit, Are they given complete discretion? And if there's something that you8404 know, a road that they wanna go down, they can choose to do that as the auditor, or or are they usually specific8410 parameters that they're given within their enabling, you know, statute or authority?8414
SPEAKER9 - That's a great question, senator. Thank you. I would say, you know, the 1 state where I have found that an executive auditor does the audit, it is it is well constrained within financial audit parameters. So they are going to be looking at financial statements. They are going to be looking at, you know, expenditures, whether those expenditures are documented properly through receipt reconciliation and things like that, that they fall within the purview of expenses that a legislature is allowed to incur. And then as far as speaking to the the audits the performance audits that happen say in in Connecticut, those are going to8463 be, I don't know if constrained is the right word, but guided via the yellow book standards.8469 And so those are going to say the types of information, the types of resources, and, yeah, just information that is required to make those types of, you know, determinations in a sound way.
SPEAKER4 - Thank you. I appreciate that because I've I've found, you know, when people, here in the Commonwealth say to me, well, you know, you should be subject to an audit, they think of those audits that you just talked about. Right? They think of those financial audits. It's taxpayer money that's sacrosanct. Everybody should know where every penny is spent, by the legislature. And then, you know, the kind of question goes into, okay, do those audits in those states have those parameters? You just answered that. You know, many of them do have have guidelines, and what we're trying to wrestle with is if if if we're absent those guidelines, you know, do we get into a situation where it's not just that financial audit, how do you audit the performance of legislation, number 1? And number 2, I guess the question I have for you, have you seen any other states, or any other jurisdictions where there's been an attempt to audit kind of the behind the scenes, probably a terrible term to use, but really the behind the scenes of a legislature, how people decide what they wanna support, not support, what committees should move bills, how things make it to the floor. Have you seen that attempt anywhere, and what was the result of that?
SPEAKER9 - I have not. I have not seen that, that attempt at level of performance evaluation happen8559 in any of the states. You know, and when doing my research, many of these questions are posed hypothetically because it's just not something even in the states that I8571 offered, say, in Utah or Washington, where their executive, auditor does have that purview. It's explicit within their jurisdiction that they can, audit the legislature. You know, I think they anticipate that if it were to go beyond, you know, that kind of financial audit level that, it would go to the judiciary for, mediation. And so in order to8600 avoid that, they tend to try and work it out amicably and come to agreements8606 on what is within the purview and what is not when, an executive auditor is looking at the legislative branch.
SPEAKER4 - Understood. Thank you.
SPEAKER1 - Thank you, miss McClure. We greatly appreciate your testimony, and thank you so much for sending along, background documentation, which we will certainly take a look at. Really appreciate it. Thanks so much.
SPEAKER9 - Thank you,8630 madam chair. I appreciate it. Thank you.
SPEAKER1 - Next, we will hear virtually from8636 Harriet Richardson. Harriet Richardson is a respected expert in government auditing standards with a career spanning over 3 decades as a performance auditor, a yellow book adviser,8648 and an instructor on government auditing standards. For 33 years,8653 she served as a performance auditor at the federal, state, and local levels of government, including serving as city8659 auditor for the city of Palo Alto,8661 California, Audit Manager for the city of Berkeley, California, Deputy State Auditor for the Washington state auditor's office, audit director for the city and county of San Francisco, California, and deputy city auditor for the city Of Atlanta's Auditor's Office, Georgia. Lots of auditing experience. Her accomplishments appointed by California governor Gavin Newsom to be the first inspector general for the San Francisco Bay Area Rapid Transit System, also known as BART, serving for 5 years on the board of the Association of Local Government Auditors, ALGA, including a term as president and as chair of the ALGA's professional issue committee and being a local government representative on the comptroller's general's government auditing standards advisory council, which advised the GAO on the yellow book. She also currently sits on the Institute of Inter Internal Auditors International Internal Audit Standards Board and the Government Accounting8723 Standards Advisory Council. She was recognized for her professional achievements when she received the Association of Government Accountants Excellence in Government Leadership Award 02/2017 and the David M. Walker Excellence in8738 Government Performance and Accountability Award 2018.8742 1 of her fellow government auditors and a leading lecturer on government auditing standards referred to Harriet Richardson as the most respected yellow book yellow book expert in The United States. Welcome, miss Richardson. Thank you for joining us.
SPEAKER10 - Thank you. Good morning, chair, members of the committee, and thank you for having me to here8767 today. As you've heard, I'm Mary Richardson. I've been invited here to speak to you about auditor independence, specifically with regard to the state auditor's plan to conduct performance audits of the general court of Massachusetts. I'll provide my comments in the context8784 of the government auditing standards based on my 30 plus years of experience conducting government performance audits and my 5 years serving on the Comptroller General's Government Auditing as Standards Advisory Council. In preparing for today, I reviewed copies of correspondence between the state auditor and the senate subcommittee, the state auditor's annual independent certification forms for 02/2023 through 2025, notes summarizing her conversation with the US Government Accountability Office, also known as the GAO, regarding auditor independence and public comments she has made regarding her authority to audit the general court. These documents formed the basis for my comments to you today. The guiding8832 force behind government audit performance audits comes from the generally accepted government auditing standards,8838 commonly referred to as GAGAS or the yellow book, which are issued by the Comptroller General of the United8844 States and the GAO, and that the state auditor is required under Massachusetts general laws to follow. Gagas requires both auditors and the, their audit organizations to be independent from the entities they audit in all matters related to an engagement conducted under those standards. They also require both the auditors and the audit organization to avoid situations that8871 could cause reasonable and informed parties to conclude that the auditors or the8876 audit organization are not independent.8878 To be considered8880 independent, both the auditors and the audit organization must be capable of exercising objective and impartial judgment on all issues associated with conducting an engagement and8892 reporting the work. The8894 standards provide 2 key aspects aspects of auditor independence, which I believe you can see on 1 of the posters in front of you. The first is independence of mind. This means that auditors involved in the engagement will not be affected8908 by influences that compromise their professional judgment and ensures that auditors can act with integrity and be objective in conducting the audit and reporting the8919 results. The second aspect is independence and appearance. This refuse refers to the views of third parties. It means that such parties, knowing the circumstances, can reasonably conclude that the integrity, objectivity, or professional skepticism of an audit organization or a member of the engagement team has not been compromised. Independence of mind and of appearance are essential for ensuring the auditors perform their work in accordance with the auditing standards ethical principles, which is also shown on 1 of the posters. These principles include both integrity and objectivity, which includes both independence of mind and appearance. The ethical principles also require that auditors serve the public interest and that they do not use government information or their positions for personal gain in a manner contrary to law or in a manner that is detrimental to the legitimate interests of the audited entity or the audit organization. The independent standard identifies 7 types of threats that can impair an auditor's or the audit organization's independence. These are listed on 1 of the posters in front of you. As shown in the flowchart poster, it requires auditors to apply a conceptual framework at the audit organization, engagement team, and individual auditor levels to identify if any of those threats to independence exist. There are several steps to the conceptual framework process9015 and 3 possible outcomes. The first step is to identify9019 any threats to independence. If there are none, the outcome is that the auditors and audit organization may proceed with the engagement. If an auditor or the audit organization identifies any threats to9032 independence, they must proceed to the next step, which is to evaluate the threats for significance. If there is more than 1 threat, they must be evaluated both individually and in the aggregate. If any or all of them are considered significant, the audit or audit organization must identify and apply appropriate safeguards to either eliminate the threat or reduce it to an acceptable level. If appropriate safeguards can be applied, the auditors must document the nature of the threats identified and the safeguards applied, and then may proceed with the engagement. Finally, if safeguards are insufficient to eliminate or reduce threats to9073 an acceptable level, the auditors or audit organization must abide by the third option, which is to not proceed with the engagement. I mentioned to you that there are 7 types of threats to independence. However, for purposes of this discussion, I will focus on 4 of them. The first 1 is a structural threat. This addresses if the audit organization's placement within the government entity in combination with the structure of the government entity being audited will affect the audit organization's ability to perform the work and report the results objectively. The state auditor has appropriately addressed that this is not a threat because she is in a separate branch of government from that which she9116 is wanting to audit and because she was directly elected by the voters of Massachusetts. The other 3 threats I want9124 to address are the self interest, bias, and familiarity threats.9128 A self interest threat occurs when a member of the audit engagement has a financial, personal, or other interest in something that inappropriately9138 influences their judgment or behavior. For example, if a member of the audit engagement team has been recently employed by the audited entity, they could be in a position to exert significant influence over the subject matter of the engagement and would be considered to have a self interest threat. A bias threat occurs when an auditor takes a position that is nonobjective based on their political, ideological, social, or other beliefs. Bias threats can be conscious or subconscious. An example is when a member of the engagement team has preconceptions about the objectives of a program9176 under audit that are strong enough to affect the auditor's objectivity. A familiarity9183 threat involves situations when an auditor has a relationship with management or personnel of an audited entity that, again, may lead9191 the auditor to take a position that9193 is non objective. An example is when a senior member of the audit organization has a long association with the audited entity and or its leaders. And for, clarification, I drew these examples directly from the government auditing standards. When any of those 3 threats exist, they can lead to a lack of objectivity when conducting an audit. But when all 3 exist, it makes it more difficult to implement safeguards that will eliminate or mitigate them into an acceptable level. The state auditor identified all 3 of these as independent threats in her annual independent certifications based on her service in the state legislature prior to being elected as state auditor. I also identified them, but that my identification of them was based on her statements acknowledging that the legislative audits would be based on her knowing where to look because she worked in the state legislature. The state auditor ident auditor identified steps she has taken to mitigate these independence threats. These include having consulted with the GAO to discuss independence, using the state auditor's process of robust quality assurance reviews by a team outside of the court engagement team prior to issuing reports, and saying that her involvement in the engagement is limited to developing audit topics in the planning phase and reviewing and signing the final9281 report before issuance. I do not see that any of9285 these steps would eliminate or sufficiently mitigate any of these 3 independence impairments. First, speaking with the GAO is not a safeguard. It's simply a conversation about the threats. Although she said the GAO staff told her she had assessed everything in the spirit of the GAGA standards, the state auditor also acknowledged that GAO staff said they could not approve or disapprove any safeguards. Second, the other steps are insufficient because the state continued to make statements that her
SPEAKER1 - previous knowledge of how the legislature
SPEAKER10 - works is the reason for saying the audits are necessary. Continues
to lack independence of mind because she still has self interest, bias, and familiarity threats. Third, based on the public comment she has made about why the audits are necessary, it is unlikely that any of the steps she is taking would cause a reasonable and informed third party to conclude that the state auditor's integrity, objectivity, objectivity, or professional skepticism have not been compromised, indicating that there is a lack of independence in appearance. Although the state auditor said that she herself
remains involved in developing the audit topics and also reviews and signs the final report.
SPEAKER1 - This makes her
SPEAKER10 - part of the engagement team even if she does not have the final report. This makes her part of the engagement team even if she does not actually conduct any of the other audit work and also makes her subject to the GAGAS requirements for eliminating or mitigating threats to her independence as the government auditing standards make no distinction between the core engagement team and the engagement team as a whole. All 3 of these threats can be both individually and in the aggregate viewed as impairments to independence of9406 mind, and all 3 can also be individually and collectively viewed as impairments to independence in appearance. It would be difficult for me, based on9416 my experience and knowing these facts, to conclude that any of these 3 impairments has9421 been appropriately mitigated to an acceptable level. Further, with all 3 of them present, I would find it difficult, if not impossible, to mitigate them to an acceptable level since the state auditor herself identified the audit topics based on her experience working in the state legislature. So while the voters have provided the state auditor with the statutory authority to conduct audits at the general court, she also has a requirement to conduct such audits in compliance with the government auditing standards, and she has several impairments to her independence that limit her ability to meet that statutory requirement. This concludes my comments, and I will now take any questions that you may have of me.
SPEAKER1 - Thank you very much. Again, that was a a very thorough Questions? Questions? Senator Brownsberger.
SPEAKER3 - Thank you, Madam Chair. Thank you so much for your testimony. So just to kind of make sure I understand a few things, 1 of the there's a question of independence,
and 1 of the arguments that the auditors made is that she's independently elected. And what I understood from your testimony is that, yes, that cures the structural potential source of impairment, but it in no way cures the other in sources of impairment, self interest, bias, and familiarity. Is that correct?
SPEAKER10 - It's absolutely correct.
SPEAKER3 - And then you
identified a number of statements that the auditor has made that indicated bias, familiarity, you know, purporting to know where the bodies are buried or, you know, know where to look, etcetera, which would all sort of be disqualifying from the standpoint of a a Gagas independence.
SPEAKER10 - Correct. Correct. The fact that she identified the topics and that is 1 of the things that the reasons the9563 reason for those topics is based on her knowledge, that's what directly contributes to those threats.
SPEAKER3 - So taking it as clear that this auditor has disqualified herself9577 from being an objective auditor of the legislature, Just as a structural matter, do you think that any auditor elected,
I'm asking this as a theoretical question now,
you know, through a political process, is that a structure that could elect an auditor of the legislature? Do you understand my question?
SPEAKER10 - Yes, I think what you're
SPEAKER6 - asking is if it was
SPEAKER10 - a different auditor who did not come from the late legislature with previous knowledge of how the legislature worked and developing topics based on that, could a different auditor audit the legislature and meet the independence requirements? And the answer would be yes.
SPEAKER3 - Okay. Thank you.9628 Now there's a there's9629 a different line of questioning, which,
I'm not sure you reached in your in your testimony, if I may, I'm not sure. I mean, do you have comments on the extent to which GAGAS could guide a audit of a legislature? In other words, what are the scope of things that GAGAS speaks to? For example, does it speak to, you know, the equitable creation of our of laws
to the extent to which bills are being considered based on sponsorship, those types of legislative issues. Does GAGAS give any guidance to those, or what would be the appropriate scope of legislative audit under GAGAS?
SPEAKER10 - So the standards do include a component of equity as, an aspect that performance audits can look at. It does not specifically look at, can it can an auditor look at the legislative branch, but it can look at, for example, does a law that provides for something to be provided as for example, a service to be provided, is that service being provided equitably? It can't so you can look at equity. It just doesn't address it directly in the context of looking at it in how a legislature performs.
SPEAKER3 - Just to clarify that, certainly, if the legislature mandates a service,
an audit could look at how that an agency was providing that service and see if it was being done equitably. That's what Gogas contemplates, but there's no provision in GOGAS to say, do I think that, you know, a law providing for public transportation is is equitably written or that the legislature engaged9760 in an equitable process for developing9762 that law?
SPEAKER10 - It doesn't explicitly allow it, but it also doesn't explicitly not allow it. So the the perform what it specifically says that the topics that can be covered under a performance audit are broad, and it gives quite a few examples of how those law how those audits may be conducted or what kinds of topics they might cover,9789 but it doesn't explicitly prohibit looking at any, topic.
SPEAKER3 - Thank you.
SPEAKER1 - Thank you. I just wanna follow-up on 1 thing that you said.
We've been told by the auditor staff that the auditor was clear quote, cleared by the GAO in 2023 during a consultation with them about conducting an audit in Massachusetts legislature. I think you referred to it. In your experience, does the GAO clear auditors to conduct, audits? Is there a, process for doing that? Is there a form or anything that we can point to?
SPEAKER10 - My experience is that the GAO would not clear anyone in any way. When9845 so the GAO will have a conversation, and they will direct you to the guidance in the government auditing standards for you to decide how to apply it. They do not give direction.9858 They do not approve a process or safeguard. And they did she does specifically acknowledge in 1 of her statements that they told her they will not approve or disapprove a safeguard. That would be the9871 same as clearing someone. They do not clear anyone. They would not clear her. I think she may be referring to the statement where she said that she had assessed the, that she had assessed the independent standard in accordance with what in in the spirit of the standards, but they would not have cleared her.
SPEAKER1 - And so the9896 an auditor is the is the person or the entity that decides that there's a threat and then what they're gonna do about it.
9906 SPEAKER109906 -9906 Exactly.9906 By using that conceptual framework.
SPEAKER1 - Okay. Thank you.
SPEAKER7 - Thank you, madam chair. Thank9918 you so much, for the information you've provided. In in talking with us, you talked about an engagement team and a core engagement team. So in our conversations, with the auditor, we've we've talked about, the levels of supervision between the folks who would be doing the work of the audit and then who supervises these folks. And when you were talking with us, you you didn't see much space between, a supervision of the work and the work itself. Could you go into9953 a little bit more detail there?
SPEAKER10 - Sure. I actually, I don't see any space between those. The anyone who is involved in planning, directing, conducting, reviewing the the any component of the audit is part of the engagement team. The yellow book does not make any distinction between a core engagement team or the engagement team as a whole. It does identify different levels of people who participate in the audit, but they are all subject to participating to to being they are all subject to the independent standard. They must all be independent of the entity they are auditing by not having any of these threats present, as part as part of their either individually as the engagement team as a whole. The audit organization refers to the audit organization as a whole, meaning everyone who's involved in an audit. So the only way I see that she could be independent is to have had absolutely no involvement in the audit. No involvement in, determining the audit topics, no involvement in reviewing the audit, and not signing the and get the audit report.
SPEAKER7 - Thank you very much.
SPEAKER4 - May I have after you.
SPEAKER5 - No. No. No.
SPEAKER1 - It's it. I'm I'm gonna wrap it up.
SPEAKER3 - Oh, okay. Oh, no. Real quick. But so it's too late for that now in this audit?
SPEAKER10 - Yes.
SPEAKER3 - Yeah. I mean, to to sort of back out because it's it's all it's all been so defined. Right? Yes.
SPEAKER1 - Thank you. Senator Feeney.
SPEAKER4 - Thank you, madam chair. And thank you, miss Richardson, for your testimony. Very enlightening as well. Appreciate taking the time. A quick question on scope, and best practices. You had mentioned it earlier in your your remarks. Is it common practice for an auditor, in their engagement meeting or kind of their opening, you know, engagement conference with an an auditee to have an open scope, or is it10090 usually more specific? How do you kinda define those standards? Understanding fully and we met with the office of the state auditor where they said, you know, senator, we may have an issue where10102 as we're looking at 1 thing in the explained scope, all of a sudden, it starts to raise questions about something related to that, and we wanna be able to have the ability to kinda go down that road. Fully understand that, and that's how audit should be conducted. Where where where I'm struggling and I think we're trying to figure out is if it's just an open ended scope saying, well, we're not gonna rule anything out, and this is what we're gonna start with. However, we could go down, you know, multiple roads, after this. Is that best practice? Have we seen that? What is the what is the usual course of action when you're defining scope with an oddity?
SPEAKER10 - So the the audit standards require you to do a planning process. And as a result of that planning process, you identify your audit scope and objectives.10150 So the objective is the specific issue that you're looking at, and the scope is kind of the boundaries of it. For example, a time frame or a geographical location, if there's multiple locations for like a transportation agency, it's kind of all over the state. Are they gonna look at certain, locations for that? But and but it's really the boundaries of that objective. And the objective is usually pretty specific. It's not usually just, oh, we're gonna leave it open to whatever we wanna look at. It's, like the legislative branch as a whole. It's you usually a specific aspect of it. There is a specific requirement in the, standards for the auditors to communicate an overview of the objectives, scope, and methodology, the timing of the audit, and the planned reporting on10203 it. And then it says, unless doing so could significantly impair the auditors' ability to obtain sufficient appropriate evidence to address the audit objectives. But they are supposed to communicate that with the management of the audit entity, those charged with governance and the, any individuals contracting for requesting the audit services. And so, and the cognizant legislative committee. So, they are required to do that and then if they change along the way, they should be updating that communication to say, now we're also going to look at this and why they're looking at that, in addition to what the original objectives were. So it shouldn't just be this broad open. We're leaving it open to look at whatever we decide we wanna look10250 at as we go. It really should be based on the result of the planning process, and there's a lot of steps identified in the standards as to what that planning process10259 should be looking at. And so they really should be10263 starting off fairly broad, but narrowing it and narrowing it10267 to specific objectives and telling you10269 what those objectives are.
SPEAKER4 - Thank you. And understanding this, I I know you've done some research on on the issue that we're facing with this particular audit. Do you believe that that's been done?
SPEAKER10 - No. This audit seems very broad, open ended as to what they, what she wants to look at.
SPEAKER1 - Thank you. Thank you, miss Richardson. We truly appreciate your, testimony and the information that you've provided us. It's been very helpful.
SPEAKER6 - Thank you.
SPEAKER1 - The last speaker we have is, Diane Diane Ray who, is also virtual. Diane Ray served as the Colorado state auditor for 10 years. In that role, she10317 recognized she was recognized for her innovative leadership style. The Colorado office of state auditor10323 received the highest possible rating from the National State Auditors Association for every external review conducted while miss Ray served as state auditor. Prior to becoming state auditor, miss Ray served as the OSA's deputy state auditor primarily responsible for the financial audit of the state of Colorado. She began began her career at the office of the state auditor in 02/2002 as director of the local government audit division. Prior to joining the OSA, she worked in local government for 15 years, including as director of finance administration for the city of Lewisville, Colorado. She's a licensed CPA in Colorado and Arizona. In 02/2015, miss Ray was honored as Colorado's top public administrator by the University of Colorado Denver School of Public Affairs and won the National State Auditor's Association's Excellence in Accountability Award in 02/2014. She also was chosen as 1 of the 3, quote, women to watch, end quote, in the experienced leader category in 2012 by the Colorado Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Since 2020, Ms. Ray has served10400 as a board member of the Governmental Accounting Standards Board, also known as GASB. Welcome, Auditor Ray, and thank you for joining us.
SPEAKER8 - Thank you, madam chair. My comments are fairly brief, and they're all based on my experience, so that's what I bring to the table. Thank you for the opportunity to speak with you today and represent the state auditor community. First, I would like10426 to provide you background on the structure and oversight of the Colorado State Auditor's10430 office. The auditor is appointed by the legislature for a 5 year term. The office is part of the legislative branch, and this structure provides independence from all departments and programs within the executive and the judicial branches. However, with this structure, the auditor lacks independence to audit any legislative departments or programs. The auditor has authority to conduct performance audits in the executive and judicial branches and to conduct the annual financial audit of the state of Colorado. The legislative audit committee reviews all audits and releases them to the public. The committee is composed of 4 senators and 4 representatives with the 2 major political parties equally represented. Although the structure may be different from the structure of an elected auditor, all auditors follow the same yellow book standards as miss Richardson10487 has just discussed so that our audits can represent that they are in compliance with generally accepted government auditing standards, which I will refer to as government auditing standards. This is important because it ensures the credibility of the audit. This is all validated through our peer review process that is required every 3 years to be able to conduct audits and compliance with the government auditing standards. In my 10 years as state auditor, we always received a pass peer review rating, which is the highest, A peer review rating of pass with deficiencies or fail would question the auditors' adherence to the government auditing standards. Keep in mind that the 3 year peer review period usually covers audits about a year behind the peer review date and the 2 years prior to that. Controls are the cornerstone of auditing, and miss Richardson has talked a lot about independence. 1 of the controls that we had in place around independence was the requirement that all auditors, including myself, sign independence statements each year and to identify any possible threats to their independence. Each threat was evaluated, and safeguards were documented to eliminate or reduce the threat if possible. This would be reviewed and updated when staffing each new audit. Objectivity is 1 of the ethical principles identified in the government auditing standards and is closely related to independence. Objectivity is defined in the government auditing standards as including, and I quote, independence of mind and appearance when conducting engagements, maintaining an attitude of impartiality, having intellectual honesty, and being free of conflict of interest. As I was nearing the end of my 10 years as state auditor, the senate minority leader commented to me about our balanced approach. And at that point, he didn't even know what party I was affiliated with. That was 1 confirmation to me that our actions and reports were neutral and objective. Lastly, I just wanna touch on findings. Our audits always clearly identified the 5 parts of10629 findings, and the findings the 5 parts are condition, criteria, cause, effect, and recommendation. The condition is the problem that the auditor finds, often referred to as the finding, and is discovered through sampling and testing against the criteria. The criteria10649 are the foundation of10651 what we measure the testing and samples against. These are objective and information that is obtainable by the auditors, for instance, statutory requirements, rules, written procedures, or required attributes. The cause is the reason for the finding or condition and has a direct relationship to the recommendation. The effect is the impact that the10676 finding has on not meeting the criteria.10678 The recommendation is the fix for the cause. You can see that the parts are all interconnected and tie the audit report together and correspond to reporting requirements of the government auditing standards. By leaving out10695 any of these parts or not having solid criteria, the audit credibility could be suspect. Since we do not have enforcement authority over audit recommendations, my office developed an annual report providing information about audit recommendations that had been agreed to by the agency10714 but had not been implemented. We would annually present this information to the joint budget committee and the legislative oversight committees for the specific departments. As a result, the legislators had the information and could choose to take action if they deemed it necessary. This concludes my introductory remarks, and I would be happy to answer any questions.
SPEAKER1 - Thank you. Senator Kompadocio.
Just, 1 follow-up. The peer review process, who are the peers?
SPEAKER8 - We always had, the National State auditors auditors association do our peer reviews, and I believe they do the 1 in Massachusetts10764 also. They put together a team of auditors from other states, and so they are independent from everything that we have done.
SPEAKER5 - Excellent.
SPEAKER1 - When you were Colorado's auditor, what did you do to maintain your own and your office's independence and objectivity? How did you try to avoid accusations of bias?
SPEAKER8 - That and that's a good question. So to maintain our independence, it was really important, first of all, these forms that everybody was required to sign. Because that way, we could make the assessment internally before we ever assigned an auditor to a to a specific audit. If they had any biases, any kind of issues that would question that independence, then they were not10819 assigned to that audit. And as far as the other the structural biases and, other the other biases that might exist, We had a director that was our quality assurance director, and he would do those evaluations every year to ensure that our audit as a whole our audit office as a whole had independence with whatever we chose to audit.
SPEAKER1 - Great. I'm I'm writing.
Excellent. Senator Feeney.
SPEAKER4 - Thank you, madam chair, and, thank you, miss Ray, for your testimony. I appreciate you hanging in there. I know we're running late this afternoon, but I do appreciate your perspective. And and just a quick question for you on, well, actually, 2 parted question. We've we've heard a lot of confusion from people based on, you know, some statements that were made that it's a financial audit versus a performance audit. We are legislators that come from many different backgrounds, but certainly not professional auditors. You know, you all do amazing work, and and we don't, we don't pretend to understand the intricacies of the audit process. So 1 of the things that I wanna clarify based on, you know, some of your statements you all have heard earlier, financial audit versus performance audit. Do you in your opinion, do you think that a performance audit could be done over the legislature? How do you define performance, which is something I asked earlier? What are some of the the guardrails there on on, I was using the word scope, but I heard from the previous testifier that maybe its objectives. You know, what are some of those guardrails? Is that appropriate? Have you ever seen that happen? And and in your opinion, could that happen where where the legislature's performance and kinda inner workings are audited?
SPEAKER8 - I I think that's a great question. First of all, I wanna parse the financial audit versus the performance audit. So I'm gonna put on my GASB hat, which I'm a board member of, and that's the financial side. So any audit that's done by a CPA firm, by, the state auditors that are following the accounting10960 standards and the reporting, and, that's what they're auditing. So it's very specific to the financial data that's coming10970 out. Now on the performance side, that can be that can encompass almost anything. Now getting to your question specifically relating to the legislature, it's interesting that you asked that because we had been asked years ago, and this was prior to me being state auditor, to audit the legislators, the legislature's, process for creating fiscal notes. We did not have independence to do that, but we did produce a report that was an informational report. So it was not done under GEGA standards, but it provided information to the legislature about how they're creating those fiscal notes and maybe ways of improving that. So that was done, but it was not done as a performance audit. And that was really that was really, really critical, to actually do a performance audit that would meet GAGA standards. I think that would be really, really difficult to try and do. Now in Colorado, we would not have the independence to do it. But for another state, different structure, I just think that there's so many things that to find the right criteria to measure any kind11050 of performance, objectives, I think would be difficult because a lot of what you do is very subjective.
SPEAKER4 - It was interesting. You said, you were asked to do that audit, but you lacked the independence to do so. Why was that? Was that a a structural issue? Was it was there other was there another threat there? Or
SPEAKER8 - It was a structuralist issue because since our structure is that we are part of the legislative branch, you can't audit yourself. And so that kept us from doing an actual performance audit. Now we get we get around that on the financial audit because we contract that with an outside CPA firm. So we are not the ones doing that audit.
SPEAKER4 - Mister, thank you. And my only follow-up to that, second part of that, when we talk about performance audit versus11107 financial audit, 1 of the things that we've been trying to, ascertain is is what it what are the objectives of this proposed audit of the Massachusetts legislature, and and within that, what is the scope? Right? Is it common and and and I asked the previous testifier as well. Is it common to have kind of an open ended scope? How do you define it? How do you define the objectives? And what are the best practices from the auditing community when they're meeting, to engage an oddity? Is it, you know, is it open generally or is it more specific? And what are some of the things that we should be we should be considering, when looking at the objectives and the scope?
SPEAKER8 - I that's a great question. And, like miss Richardson talked about, it's no. Typically, it's not open ended. You're providing an engagement letter. You're saying, this is what we're going to be looking at. And so and it needs to be specific. It's a specific area, specific program, how certain things are done. And then the objectives, as Harriet11175 mentioned, that, you know, those would be11177 laid out. Now there are cases that when you go in and you conduct a performance audit, there may be something that you see that would take you in another direction. You can amend that scope, and you can you can expand it, but it's not just open ended to start with. So that's really important to get that information out. And you have the right as the oddity to come back and you should be provided a document that says these are all11209 of the the different documents that we need. And when I talked about the different parts of the finding, make sure that you understand11217 what they're using for criteria to match up, to do that performance audit, because that's where they're looking at to find the problems or the findings. But if they don't have solid criteria, they're not gonna be able to measure that. And then it all kinda falls apart. You wanna have those 5 parts.
SPEAKER4 - Have you just following up on that. When you do get to some of those sticky wickets where, you know, okay. There's there's a little bit of pushback, you know, we're we're seeking certain information that maybe the oddity doesn't wanna give us for whatever reason, what is the what is the common response to that? Do you do you try and work with them collaboratively? Do you say, okay. Well, we're gonna go to court or take us to court, or is it is it adversarial?
SPEAKER8 - It could be all of the above. Okay. You you start out trying to work together and, to get the information that you need. I I have had to sue auditees to be able to audit them, and and I did win. So I do wanna point that out. So, you know, yes, we have gone to court before. Typically, we can get our11293 attorneys talking and then they can resolve it. And, in in Colorado, we have pretty much carte blanche authority for any kind of document, which is really great because they really can't push back too much because we are able to get access to all of those documents. But there's there needs to be a reason. And as the oddity, you can11319 come back and, well, what are you looking for?11321 What are you trying to what are you trying to find? And that11325 goes back to the 5 parts of the finding and the criteria.
SPEAKER4 - Yeah. And I think, you know, just looking ahead, if those reasons were constitutional separation of powers issues, which we examined earlier in this in this meeting, you know, that's that's the concern. Right? It's it's I I think that's what makes11343 us unique as a legislature. You probably aren't gonna meet with many executive agency11347 oddities that will say, well, you know, we have a constitutional issue here. So I think11353 that's what makes us unique, but I appreciate it. Thank11355
you.
SPEAKER7 - Thank you, madam chair. Madam auditor, thank you, for your helpful remarks. If you were setting up an audit and a member of your team was openly critical of the potential auditee, you know, in public before the audit, how would you handle that?
SPEAKER8 - Remove the person from the team. I I would not let them do an audit because especially if they're making public comments11388 because that would that would have the appearance of us being biased as we go into the audit. You can't do that.
SPEAKER7 - But what if the person was the supervisor of the team?
SPEAKER8 - I would find another manager for that audit.
SPEAKER7 - Thank you.
SPEAKER1 - Madam auditor, thank you very, very much for your time. It was very informative, and we really appreciate it, and hope things are going well out there in Colorado.
SPEAKER8 - Thank you.
SPEAKER1 - As with that, the invited testimony portion of this hearing has concluded. As I mentioned at the beginning, we reserved the final hour of our hearing for members of the public that preregistered to testify, even after extending this deadline. We, for a full 24 hours, no members of the public registered. For those of the public that do11451 wish to have their comments recorded, I11453 will repeat that the subcommittee will be accepting written testimony on this matter until Friday, April 4 at 5PM. Directions on how to11463 submit written test testimony can be found in the hearing notice on the legislator's website. And with that, do I hear a motion to con to close the hearing?