Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Higher Education (January 28, 2025)
January 28, 2025 · Department of Higher 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
“It is clear from our review of the issues examined in our report that the system in place regarding employee settlements in state government is dysfunctional – at best.”
Read the plain-English breakdown
This is a state audit of employee settlement agreements and confidentiality clauses across the Governor’s Office, its agencies, and the Comptroller’s Office from 2010 through 2022.
“This audit was conducted on the Office of the Governor (GOV) and its subordinate agencies, as well as the Office of the Comptroller of the Commonwealth (CTR), for the period January 1, 2010 through December 31, 2022.”
The auditor examined whether agencies properly reported monetary settlements and whether they had rules for using confidentiality language in those settlements.
“In this performance audit, we determined the following:”
Without clear rules, the public cannot easily see whether state workers are treated fairly or how taxpayer money is being used.
“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.”
As a taxpayer, this matters because settlements can involve public money, and the report says the public has a strong interest in seeing how that money is spent.
“The public interest in the financial information of a public employee outweighs the privacy interest where the financial compensation in question is drawn on an account held by a government entity and comprised of taxpayer funds.”
The audit found missing policies, incomplete records, unreported settlements, and poor tracking of confidentiality language.
“Executive offices and agencies do not have documented internal policies or procedures on the authorization, development, documentation, and retention of state employee settlement agreements and supporting records.”
The auditor recommends that the Governor’s Office create clear statewide rules, central oversight, public reporting, 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 says weak oversight can hide misconduct, put employees at risk, and expose taxpayers to abuse of public money.
“Our audit identifies areas of financial, legal and ethical risks for the Commonwealth – when our fellow public servants are at their most vulnerable.”
A state employee settlement agreement means a deal resolving a claim, grievance, complaint, or lawsuit brought by a current or former state worker against a state agency.
“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.”
4 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: The lack of policies created inconsistent, nontransparent handling of employee settlements and increased the risk of financial reporting errors.
Standard: US Government Accountability Office Standards for Internal Control in the Federal Government; Montana Legislative Audit Division best-practice guidance. ( Section 12 of Chapter 11 of the Massachusetts General Laws )
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 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: "In its response, GOV cited policies that existed during the audit period, notably CTR’s Policy on Settlements and Judgments, and the associated regulations at 815 CMR 5.00."
Why it matters: Confidentiality language could be used to obscure harassment, discrimination, or other misconduct and restrict employees from discussing settlement terms.
Standard: Public Records Law, the 2013 Boston Globe settlement-records decision, CTR’s Settlements and Judgments Policy, and internal-control best practices. ( Boston Globe Newspaper Co. v. Executive Office of Administration and Finance, Suffolk Superior Court No. 11-01184-A; G.L. c. 4, § 7, 26(a) and (c) )
4 recommendations
- GOV should establish policies and procedures on confidentiality language and supporting documentation justifying its inclusion.agency: partially agreed
- GOV’s confidentiality policy should balance employee privacy against the public’s right to know how state funds are spent.agency: partially agreed
- GOV’s policy should not protect an employee 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: "In its response, GOV cited a statement within the CTR Settlements and Judgments Policy explaining to departments 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.”"
Why it matters: Unreported settlements violated policy and regulation and could cause improper accounting and tax reporting.
Standard: 815 CMR 5.09 and CTR’s Settlements and Judgments Policy. ( Section 5.09 of Title 815 of the Code of Massachusetts Regulations; 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
- Executive office employees should be trained on the reporting 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 limited the audit and created concern that settlement information may have been unlawfully withheld.
Standard: Massachusetts Statewide Records Retention Schedule and Section 12 of Chapter 11 of the General Laws. ( Massachusetts Statewide Records Retention Schedule E05-01; Massachusetts Statewide Records Retention Schedule E05-02; Section 12 of Chapter 11 of the General Laws )
1 recommendation
- GOV should ensure agencies comply with public records law and retain settlement agreements under the Statewide Records Retention Schedule.agency: disagreed
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: "There were 57 settlement agreements requested during the course of the audit that agencies did not provide upon our request."
Why it matters: The audit could not determine whether confidentiality language was justified or whether misconduct was properly addressed.
Standard: Massachusetts Statewide Records Retention Schedule E05-02 and Section 12 of Chapter 11 of the General Laws. ( Massachusetts Statewide Records Retention Schedule E05-02; Section 12 of Chapter 11 of the General Laws )
3 recommendations
- GOV should develop policies and procedures to ensure complaints are documented, retained, and provided to auditors on request.agency: agreed
- Agencies should consult the Supervisor of Public Records to classify and retain complaint records properly.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."
More audits of this entity
Other Office of the State Auditor reports on Department of Higher Education .
-
Audit of the Department of Higher EducationState Agency / Office · June 27, 2022 - Audit of the Department of Higher EducationState Agency / Office · August 29, 2018
- Department of Higher Education's Optional Retirement ProgramState Agency / Office