Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Elementary and Secondary Education (January 28, 2025)
January 28, 2025 · Department of Elementary and Secondary Education · Read the full official report on mass.gov ↗
Published January 28, 2025 Audit covers January 1, 2010 – December 31, 2022 Under Diana DiZoglio · 2023–present
source
“The Administration has no apparent standard approach to records retention, no single point of data collection or analysis, and no demonstrable management of agencies’ use of confidentiality agreements.”
Read the plain-English breakdown
This is a performance audit of employee settlement agreements across the Governor’s office, the Comptroller, and 73 other executive branch agencies from 2010 through 2022.
“As such, our review of the use of employee settlement agreements was completed at GOV, CTR, and 73 other executive branch agencies for the period January 1, 2010 through December 31, 2022.”
Auditors wanted to know whether agencies properly reported money settlements and whether they had rules for using confidentiality or nondisclosure language.
“In this performance audit, we determined the following:”
The report says weak controls can hide misconduct, misuse taxpayer money, and leave employees unsure of their rights.
“This perpetuates the risk that public employees may continue to face abusive or harassing treatment from perpetrators, and that the taxpayers be required to pay for the costs of settlements or litigation in connection with this continued behavior.”
As a resident or taxpayer, this affects whether public money is spent openly and whether government workers are protected when they raise serious workplace concerns.
“This results in an inconsistent process that is not transparent to the citizens of the Commonwealth regarding how their public employees are treated or how their tax dollars are being spent.”
The auditor found missing policies, incomplete reporting to the Comptroller, missing agreements, and missing complaint records tied to confidential settlements.
“Below is a summary of our findings, the effects of those findings, and our recommendations, with links to each page listed.”
The report recommends formal statewide policies, better central oversight, public reporting, training, stronger record retention, and limits on confidentiality language.
“GOV should provide centralized management and oversight over the use of state employee settlement agreements to ensure that policies and procedures are adhered to and to provide reporting to the public regarding the use of these agreements.”
The report treats this as a major transparency and accountability problem because settlement agreements can reveal patterns of misconduct or mismanagement inside state agencies.
“These agreements represent an inflection point, where executive management can become aware of practices inside agencies where potential abuse or other inappropriate activity may be occurring.”
A settlement agreement is a written deal that resolves a claim, complaint, grievance, or lawsuit, often involving money, job status, or other terms instead of continuing a dispute in court or another forum.
“For the sake of consistency in the audit, we defined a state employee settlement as a settlement resulting from a formal claim3 (union and non-union grievances, complaint, or lawsuit) against a state agency brought by a current or former employee.”
3 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Did state agencies report monetary state employee settlement agreement claims to CTR in accordance with Section 5.09 of Title 815 of the Code of Massachusetts Regulation (CMR) and CTR’s Settlements and Judgments Policy?
- Did not comply To what extent, if at all, have agencies developed and implemented policies and procedures regarding the use of confidentiality requests, including nondisclosure language, within the context of state employee settlement agreements?
What the Auditor found
Why it matters: This created risk that settlements would not be handled fairly, ethically, legally, consistently, or transparently, and could lead to financial reporting errors.
Standard: Best-practice internal control standards call for management to implement control activities through policies. ( US Government Accountability Office’s Standards for Internal Control in the Federal Government )
3 recommendations
- GOV should establish and implement policies and procedures over the authorization, development, documentation, and retention of state employee settlement agreements, and requirements for supporting documentation.agency: agreed
- GOV should provide centralized management and oversight over the use of state employee settlement agreements.agency: agreed
- GOV should establish a public reporting process for transparency and accountability over employee settlement agreements.agency: agreed
Agency response & Auditor reply
Agency: "The executive department agrees that documenting policy and procedures can help ensure consistent practice across a broad and wide-ranging government."
Auditor: "We note that it will be important that GOV ensure proper monitoring of any policy implemented to address these concerns and ensure agencies comply on an ongoing basis."
Why it matters: Confidentiality language could be used to obscure harassment, discrimination, other unlawful behavior, poor management, or misuse of taxpayer funds.
Standard: Public records law and CTR policy state that confidentiality provisions may not override mandatory disclosure requirements. ( Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. No. 11-01184-A; CTR’s Settlements and Judgments Policy )
4 recommendations
- GOV should establish and implement policies and procedures regarding confidentiality language and supporting documentation justifying its inclusion.agency: partially agreed
- GOV’s policy should weigh employee privacy against the public’s right to know how state funds are spent.agency: partially agreed
- GOV’s policy should not protect employees with detrimental workplace behavior.agency: partially agreed
- The Governor should consider an executive order limiting confidentiality language in employee settlement agreements.agency: partially agreed
Agency response & Auditor reply
Agency: "The executive department cannot concur with Audit Finding 2 to the extent that it appears to overlook the Comptroller’s Settlement and Judgments Policy which explains that “confidentiality language mandating that a settlement or settlement terms be kept confidential may not be enforceable”; that “[c]onfidentiality provisions will not create protections that do not already exist under the Public Records Law or other statutory bar to disclosure”; and that “the name of a recipient payee of a settlement or judgment payment made from the settlement and judgment account is considered a public record.”"
Auditor: "We again note here that CTR’s policy and regulations are not enforceable policy by the employer—they do not bind an agency in an executive office to any particular course of action related to settlement agreements."
Why it matters: Failure to report settlement agreements could cause improper state accounting and tax reporting.
Standard: CTR’s Settlements and Judgments Policy requires all monetary settlements and judgments to be reviewed by CTR before payment. ( CTR’s Settlements and Judgments Policy )
3 recommendations
- GOV should establish and implement policies and procedures over reporting state employee settlement agreements to CTR.agency: agreed
- All executive office employees should receive training on the policies and procedures.agency: agreed
- GOV should establish monitoring controls to ensure compliance.agency: agreed
Agency response & Auditor reply
Agency: "We agree that offices and agencies must follow the Comptroller’s reporting requirements, even when the settlement at issue requires no disbursement from the settlements and judgments fund."
Auditor: "Based on its response, GOV plans to take some measures to address our concerns in this area."
Why it matters: The missing agreements prevented testing of CTR reporting compliance and settlement list accuracy, increasing the risk that agreements were undisclosed or improperly accounted for.
Standard: The Massachusetts Statewide Records Retention Schedule requires agencies to retain employee complaint, grievance, personnel action, and related settlement records for specified periods. ( Massachusetts Statewide Records Retention Schedule E05-01; Massachusetts Statewide Records Retention Schedule E05-02 )
1 recommendation
- GOV should ensure agencies comply with public records law and develop policies and procedures to retain employee settlement agreements under the statewide retention schedule.agency: partially agreed
Agency response & Auditor reply
Agency: "We respectfully disagree with the report’s assertion that “57 executed settlement agreements” requested by OSA “were not provided.”"
Auditor: "We revisited the responses from the agencies that came in late and after our requested timelines and revised the figure, which still shows 47 settlements agreements were not provided to us in order for us to conduct our tests."
Why it matters: Without underlying complaints, auditors could not assess why confidentiality language was included or whether unlawful behavior was properly addressed.
Standard: The Massachusetts Statewide Record Retention Schedule requires agencies to retain employee grievance and complaint records. ( Massachusetts Statewide Record Retention Schedule E05-02; Section 12 of Chapter 11 of the General Laws )
3 recommendations
- GOV should develop policies and procedures to document and retain complaints and provide them to external auditors on request.agency: agreed
- Agencies should consult with the Supervisor of Public Records to accurately classify records and retain them as required.agency: agreed
- Complaints involving substantiated egregious behavior should be retained permanently.agency: agreed
Agency response & Auditor reply
Agency: "Regardless of the numbers, we agree that the report has identified historical record-keeping issues requiring attention."
Auditor: "What we know for certain is that we did not receive 124 of the 159, or 78% of, requested copies of the original claim, complaint, or grievance."
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