21′ SB0240/HB1049 – C.Sexton/Gardenhire
Present law requires that all records of any association or nonprofit corporation that meets the following description be open for inspection (referred to in this bill as an "entity"):
(1) Established for the benefit of local government officials or counties, cities, towns or other local governments or as a municipal bond financing pool;
(2) Receives dues, service fees or any other income from local government officials or such local governments that constitute at least 30 percent of its total annual income; and
(3) Was authorized as of January 1, 1998, under state law to obtain coverage for its employees in the Tennessee consolidated retirement system.
Present law exempts such an association or nonprofit corporation from the public records requirement if the association or nonprofit corporation complies with the following requirements:
(A) The board of directors of the organization causes an annual audit to be made of the financial affairs of the organization, including all receipts from every source and every expenditure or disbursement of the money of the organization, made by a disinterested person skilled in such work. Each audit must cover the period extending back to the date of the last preceding audit and it must be paid out of the funds of the organization. The audit must be conducted in accordance with the standards established by the comptroller of the treasury for local governments. The comptroller of the treasury, through the department of audit, is responsible for ensuring that the audits are prepared in accordance with generally accepted governmental auditing standards, and determining whether the audits meet minimum audit standards prescribed by the comptroller of the treasury. An audit is not accepted as meeting these requirements until such audit has been approved by the comptroller of the treasury. The audits may be prepared by a certified public accountant, a public accountant or by the department of audit. If the governing body fails or refuses to have the audit prepared, the comptroller of the treasury may appoint a certified public accountant or public accountant or direct the department to prepare the audit;
(B) The cost of such audit must be paid by the organization. Each such audit must be completed as soon as practicable after the end of the fiscal year of the organization. Copies of the audit will be available for public inspection. Copies of each audit shall also be made available to the press; and
(C) The audit must contain:
(i) A listing, by name of the recipient, of all compensation, fees or other remuneration paid by the organization during the audit year to, or accrued on behalf of, the organization's directors and officers;
(ii) A listing, by name of recipient, of all compensation and any other remuneration paid by the organization during the audit year to, or accrued on behalf of, any employee of the organization who receives more than $25,000 in remuneration for such year;
(iii) A listing, by name of beneficiary, of any deferred compensation, salary continuation, retirement or other fringe benefit plan or program (excluding qualified health and life insurance plans available to all employees of the organization on a nondiscriminatory basis) established or maintained by the organization for the benefit of any of the organization's directors, officers or employees, and the amount of any funds paid or accrued to such plan or program during the audit year; and
(iv) A listing, by name of recipient, of all fees paid by the organization during the audit year to any contractor, professional advisor or other personal services provider, which exceeds $2,500 for such year. The listing must also include a statement as to the general effect of each contract, but not the amount paid or payable thereunder.
Similarly, present law provides that a governmental entity may create and maintain a reserve or special fund for the purpose of making payment of claims against it payable pursuant to the Governmental Tort Liability Act or for the purpose of purchasing liability insurance to protect it from any and all risks created by the Act. Present law requires that an insurance pool, special fund, reserve fund, or legal or administrative entity administering any such pool or fund created and authorized under this provision be audited annually in accordance with standards established by the comptroller of the treasury.
This bill revises the provisions above so that the public records requirement will not apply to an entity described above, if the comptroller audits the entity. This bill deletes the provisions described above in (A) but retains the other audit provisions described above in (B) and (C) with certain revisions. This bill revises the information to be provided under (C)(i) above to instead be "a listing, by name of the recipient, of all compensation, fees or other remuneration paid by the entity, or any other such entity, during the audit year to, or accrued on behalf of, the organization's directors and officers." This bill also revises the audit information described above in (C)(iv) to require that the specific amount paid or payable under the contract be provided.
This bill adds that items (C)(i)-(iv) above do not require the disclosure of any compensation or remuneration:
(1) Paid to any lobbyist registered with the Tennessee ethics commission who is registered to lobby for other employers in addition to being registered to lobby for entity; or
(2) Paid to any attorney who is employed by a law firm and performs legal work for other employers in addition to performing legal work for the entity. This does not prohibit a requester from obtaining the amounts of compensation or remuneration paid to an attorney on behalf of a political subdivision if the requestor requests the information directly from the political subdivision.
Similarly, in regard to the Governmental Tort Liability Act, this bill revises the above-described present law provisions to require that the comptroller perform the audit of the insurance pool, special fund, reserve fund, or legal or administrative entity administering any such pool or fund.
TLRC supports all measures that result in more transparency.
TLRC Observed Process
This bill passed unanimously in both chambers.