A-91513, MARCH 29, 1938, 17 COMP. GEN. 786

A-91513, MARCH 29, 1938, 17 COMP. GEN. 786

UNITED STATES NAVAL ACADEMY - STATUS OF "LAUNDRY FUND," POSITIONS AND EMPLOYEES PAID THEREFROM, AND APPLICABILITY OF CIVIL SERVICE RULES AND REGULATIONS POSITIONS AND EMPLOYEES IN THE LAUNDRY OF THE UNITED STATES NAVAL ACADEMY, PAID FROM THE ,LAUNDRY FUND" CREATED BY CHARGES OR DEDUCTIONS FROM THE PAY AND/OR ALLOWANCES OF MIDSHIPMEN USING THE LAUNDRY SERVICE, ARE GOVERNMENT POSITIONS AND EMPLOYEES, AND THE FACT THAT THE LAUNDRY DEDUCTIONS ARE DEPOSITED IN A PRIVATE BANK INSTEAD OF IN THE TREASURY IN SUPPLEMENT OF THE DIRECT APPROPRIATION FOR THE LAUNDRY, DOES NOT REMOVE THEM FROM THE CONTROL OF THE GOVERNMENT OR RENDER THEM NONACCOUNTABLE FUNDS. IT IS NOT WITHIN THE SCOPE OF THE DUTIES AND RESPONSIBILITIES IMPOSED BY LAW UPON THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO DETERMINE IN ANY CASE WHETHER THE CIVIL-SERVICE LAWS AND REGULATIONS ARE REQUIRED TO BE FOLLOWED IN MAKING APPOINTMENTS OF FEDERAL PERSONNEL.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, MARCH 29, 1938:

REFERENCE IS MADE TO LETTER DATED DECEMBER 29, 1937, FROM THE ACTING PRESIDENT OF THE COMMISSION, IN PART AS FOLLOWS:

THE COMMISSION HAS THE HONOR TO REQUEST YOUR DECISION ON THE FOLLOWING QUESTIONS RELATIVE TO THE STATUS OF CERTAIN POSITIONS AND EMPLOYEES AT THE U.S. NAVAL ACADEMY:

1. ARE SUCH OF THE POSITIONS IN THE LAUNDRY AT THE U.S. NAVAL ACADEMY AS ARE PAID FROM THE SO-CALLED "LAUNDRY FUND" GOVERNMENT POSITIONS, AND ARE THE INCUMBENTS, THEREFORE, EMPLOYEES OF THE UNITED STATES GOVERNMENT?

2. IF THE ANSWER TO QUESTION 1 IS IN THE AFFIRMATIVE, ARE SUCH POSITIONS SUBJECT TO THE CIVIL SERVICE ACT AND RULES?

THE OPERATIONS OF THE LAUNDRY AT THE U.S. NAVAL ACADEMY ARE FINANCED IN PART FROM FUNDS APPROPRIATED DIRECTLY BY CONGRESS AND IN PART FROM A "LAUNDRY FUND" WHICH IS CREATED BY CHARGES OR DEDUCTIONS FROM THE PAY OF MIDSHIPMEN AND OFFICERS USING THE SERVICES OF THE LAUNDRY. SOME OF THE CIVILIAN EMPLOYEES OF THE LAUNDRY ARE PAID ENTIRELY FROM APPROPRIATED FUNDS, AND THESE EMPLOYEES AND THEIR POSITIONS ARE REGARDED BY BOTH THE COMMISSION AND THE NAVY DEPARTMENT AS SUBJECT TO THE CIVIL SERVICE ACT AND RULES. OTHER CIVILIAN EMPLOYEES OF THE LAUNDRY ARE, HOWEVER, PAID ENTIRELY FROM THE LAUNDRY FUND. FOR EXAMPLE, A MEMORANDUM FROM THE EXECUTIVE DEPARTMENT OF THE ACADEMY, DATED MARCH 18, 1935, INDICATES THAT THERE WERE THEN EMPLOYED AND PAID FROM THE LAUNDRY FUND (A) THE LAUNDRY MANAGER, (B) 3 CHAUFFEURS, (C) 3 WASHMEN, AND (D) 89 LAUNDRYMEN AND LAUNDRESSES. IT IS THE STATUS OF SUCH EMPLOYEES AND THEIR POSITIONS THAT IS IN QUESTION. THE NAVY DEPARTMENT TAKES THE VIEW THAT SINCE THEY ARE PAID FROM THE LAUNDRY FUND, THEY ARE NOT SUBJECT TO THE CIVIL SERVICE ACT AND RULES. A COPY OF AN OPINION, DATED DECEMBER 10, 1935, OF THE JUDGE ADVOCATE GENERAL OF THE NAVY, IS ENCLOSED. THE COMMISSION, ON THE OTHER HAND, REGARDS THEM AS GOVERNMENT POSITIONS AND EMPLOYEES, AND CONSEQUENTLY, SINCE NO EXPRESS EXEMPTION EXISTS, CONSIDERS BOTH THE POSITIONS AND THE EMPLOYEES AS SUBJECT TO THE CIVIL SERVICE ACT AND RULES.

FROM TIME TO TIME AS THE EXIGENCIES OF APPROPRIATED FUNDS MAY REQUIRE, EMPLOYEES OF THE LAUNDRY ARE SWITCHED FROM ONE PAYROLL TO ANOTHER. FOR EXAMPLE, DUE TO A DIMINUTION OF APPROPRIATED FUNDS FOR THE FISCAL YEAR 1933, THE PAY OF THE LAUNDRY MANAGER WAS SWITCHED FROM APPROPRIATED FUNDS TO THE LAUNDRY FUND.

THE QUESTION, IT WILL BE SEEN, CONCERNS THE EFFECT OF THE IMMEDIATE SOURCE OF PAYMENT UPON THE STATUS OF THE POSITIONS AND EMPLOYEES IN QUESTION. WHEN THE PAY OF A POSITION IS SWITCHED FROM APPROPRIATED FUNDS TO THE LAUNDRY FUND, DOES THAT POSITION BECOME A PRIVATE, NON GOVERNMENT POSITION, OUTSIDE THE SCOPE OF THE CIVIL SERVICE ACT AND RULES, THE RETIREMENT ACT, AND ALL OTHER STATUTES AFFECTING GOVERNMENT PERSONNEL, NOTWITHSTANDING THE FACT THAT ITS INCUMBENT CONTINUES TO PERFORM THE SAME DUTIES AND TASKS AS BEFORE? AND, CONVERSELY, WHEN ITS PAY IS SWITCHED BACK TO APPROPRIATED FUNDS, DOES IT THEN RESUME ITS STATUS AS A GOVERNMENT POSITION, SUBJECT TO THESE STATUTES AND RULES? IN OTHER WORDS, MAY THE STATUS OF THESE POSITIONS BE CHANGED BACK AND FORTH AT THE DISCRETION OF ADMINISTRATIVE OFFICIALS THROUGH CHARGING THEIR PAY AGAINST ONE FUND OR THE OTHER? IT IS THE VIEW OF THE COMMISSION THAT THE STATUS OF SUCH POSITIONS AND THEIR INCUMBENTS IS NOT SO UNSTABLE.

IT MAY BE POINTED OUT THAT NOT ONLY ARE THE RETIREMENT ACT AND THE CIVIL SERVICE ACT HERE CONCERNED, BUT SECTION 212 OF THE ECONOMY ACT OF JUNE 30, 1932, IS ALSO INVOLVED. FOR EXAMPLE, THE PRESENT LAUNDRY MANAGER IS A RETIRED NAVAL OFFICER WHO RECEIVES RETIRED PAY FROM THE GOVERNMENT IN THE NEIGHBORHOOD OF $2,000 A YEAR AND ABOUT $2,450 A YEAR FROM THE LAUNDRY FUND FOR HIS SERVICES AS LAUNDRY MANAGER. IF, IN THIS CAPACITY, HE IS REGARDED AS AN EMPLOYEE "UNDER THE UNITED STATES GOVERNMENT," IT WOULD NOT BE PERMISSIBLE, UNDER THE STATUTE CITED, FOR HIM TO CONTINUE TO DRAW BOTH HIS SALARY AND RETIRED PAY WHEN THE AGGREGATE EXCEEDS $3,000 PER ANNUM, UNLESS HE WAS RETIRED BECAUSE OF WOUNDS INCURRED IN BATTLE.

THE ANSWER TO THE FIRST QUESTION MUST DEPEND ON THE STATUS OF THE FUNDS FROM WHICH THE PERSONNEL OF THE LAUNDRY ARE PAID, THAT IS, WHETHER THE DEDUCTIONS FROM THE MIDSHIPMEN'S PAY AND/OR ALLOWANCES USED TO PAY THE SALARY OF THE LAUNDRY EMPLOYEES CONSTITUTE GOVERNMENT FUNDS.

THE CIVIL SERVICE COMMISSION'S VIEW IS EXPRESSED AS FOLLOWS IN THE NEXT TO THE LAST PARAGRAPH OF THE LETTER:

IT IS, ACCORDINGLY, THE COMMISSION'S VIEW THAT POSITIONS AND EMPLOYEES IN THE LAUNDRY OF THE U.S. NAVAL ACADEMY, PAID FROM THE SO CALLED "LAUNDRY FUND" ARE GOVERNMENT POSITIONS AND EMPLOYEES SUBJECT TO THE CIVIL SERVICE ACT AND RULES.

IT APPEARS THE NAVY DEPARTMENT TAKES THE VIEW THAT ONLY SUCH EMPLOYEES AS RECEIVE THEIR PAY FROM APPROPRIATED MONEYS ARE FEDERAL EMPLOYEES, SUBJECT TO CIVIL SERVICE REGULATIONS AND REQUIREMENTS, AND THAT ALL OTHER NECESSARY EMPLOYEES ENGAGED IN THE WORK OF THE LAUNDRY ARE OUTSIDE THE FEDERAL SERVICE ON THE THEORY THAT THEY ARE NOT PAID FROM APPROPRIATED FUNDS AND, ACCORDINGLY, DO NOT COME WITHIN THE PURVIEW OF THE CIVIL SERVICE LAWS, RETIREMENT LAWS, ETC.

THE CORRESPONDENCE BETWEEN THE CIVIL SERVICE COMMISSION AND THE NAVY DEPARTMENT, COPIES OF WHICH ACCOMPANIED THE LETTER, INDICATES THAT PRIOR TO THE FISCAL YEAR 1933 THE ENTIRE LAUNDRY FORCE, INCLUDING THE MANAGER, A RETIRED NAVAL OFFICER, WAS PAID DIRECTLY FROM APPROPRIATED FUNDS AND THE EMPLOYEES WERE REGARDED AS REGULAR CIVIL SERVICE EMPLOYEES OF THE GOVERNMENT. COINCIDENT WITH THE PASSAGE OF THE ECONOMY ACT OF JUNE 30, 1932, FOR THE FISCAL YEAR 1933, CONTAINING MANY ECONOMY MEASURES INCLUDING SECTION 212 PERMANENTLY LIMITING THE TOTAL COMBINED RETIRED PAY AND COMPENSATION OF A CIVILIAN POSITION "UNDER THE UNITED STATES GOVERNMENT" TO $3,000 PER ANNUM, UNLESS THE OFFICER WAS RETIRED FOR "DISABILITY INCURRED IN COMBAT WITH AN ENEMY OF THE UNITED STATES," THE CONGRESS MATERIALLY REDUCED THE AMOUNT APPROPRIATED FOR THE PERSONNEL OF THE LAUNDRY APPARENTLY WITH THE UNDERSTANDING THAT THE CHARGE FOR LAUNDRY SERVICE AGAINST THE MIDSHIPMEN WOULD BE INCREASED TO TAKE CARE OF THE DIFFERENCE. IT APPEARS INDICATED THAT THE NAVY DEPARTMENT REQUESTED THIS ADJUSTMENT IN THE LAUNDRY SERVICE OF THE ACADEMY. WHILE IT WAS EXPLAINED TO THE CONGRESSIONAL COMMITTEE THAT THE EMPLOYEES WOULD NOT BE DISMISSED BY REASON OF THE ADJUSTMENT IN THE MANNER OF PAYING THEM, THIS EXPLANATION DID NOT HAVE THE EFFECT OF GIVING LEGISLATIVE SANCTION TO THE VIEWS OF THE NAVY DEPARTMENT--- AS APPEARS TO BE THE CONTENTION OF THE JUDGE ADVOCATE GENERAL OF THE NAVY--- THAT THE AMOUNT DEDUCTED FROM THE MIDSHIPMEN'S PAY AND/OR ALLOWANCES FOR LAUNDRY SERVICE AND USED IN LIEU OF A DIRECT APPROPRIATION TO PAY THE SALARY OR WAGES OF A PORTION OF THE LAUNDRY PERSONNEL, DOES NOT CONSTITUTE PUBLIC MONEYS, OR THAT THE EMPLOYEES PAID FROM SUCH DEDUCTIONS ARE NOT EMPLOYEES OF THE GOVERNMENT.

THE MIDSHIPMEN'S LAUNDRY FUND, UNITED STATES NAVAL ACADEMY, GROWS OUT OF A MONTHLY DEDUCTION, FROM THE PAY AND/OR ALLOWANCE OF EACH MIDSHIPMAN, TO DEFRAY HIS LAUNDRY BILL. THE DEDUCTIONS FOR LAUNDRY ARE CREDITED TO THE MIDSHIPMEN'S LAUNDRY FUND AND THE ACTUAL FUNDS, SO DEDUCTED, ARE DEPOSITED IN A PRIVATE BANK AND ARE NOT FURTHER REPORTED TO THE ACCOUNTING OFFICERS OF THE GOVERNMENT.

THE LAUNDRY AT THE NAVAL ACADEMY IS HOUSED AND EQUIPPED AS A FACILITY INCIDENT TO THE CONDUCT OF THE INSTITUTION, THEREFORE A GOVERNMENT FACILITY. TO DEFRAY PART OF THE COST OF ITS OPERATION, VARYING SUMS HAVE BEEN INCLUDED IN THE ANNUAL ESTIMATES AND IN TURN INCLUDED IN THE ANNUAL APPROPRIATIONS FOR "PAY, NAVAL ACADEMY.'

IT WILL BE NOTED FROM THE OPINION OF THE JUDGE ADVOCATE GENERAL TO THE SECRETARY OF THE NAVY, DATED DECEMBER 10, 1935 (P. 3, PAR. 10), A COPY OF WHICH ACCOMPANIED YOUR LETTER, THAT THE APPROPRIATED FUNDS, ALLOCATED TO THE LAUNDRY, WERE INTENDED FOR "DEFRAYING THE ESTIMATED COST OF LABOR TO BE EMPLOYED IN THE NAVAL ACADEMY LAUNDRY.' FOR THE YEAR 1934, WHICH IS A TYPICAL YEAR, THE APPROPRIATED FUNDS WERE $15,663.70. THIS WAS SUPPLEMENTED BY RECEIPTS FROM OFFICERS' ACCOUNTS AND VARIOUS PERSONS BY $36,244.48, AND FROM MIDSHIPMEN'S LAUNDRY ACCOUNTS BY $35,424.88, BRINGING THE TOTAL AVAILABLE FUNDS FOR OPERATION OF THE LAUNDRY TO $87,333.06 FOR THE YEAR 1934. THE APPROPRIATED FUNDS FOR 1937 HAD INCREASED TO APPROXIMATELY $24,000 FOR LABOR, EXCLUSIVE OF APPROPRIATIONS FOR ADDITIONAL MACHINERY.

THE FACT THAT THE RECEIPTS IN QUESTION ARE NOT NOW DEPOSITED IN THE TREASURY, IN SUPPLEMENT OF THE APPROPRIATED AMOUNT, AND DRAWN OUT ON WARRANT BUT RATHER ARE DRAWN FROM THE MIDSHIPMEN'S LAUNDRY FUND IN A PRIVATE BANK, AND, PRESUMABLY, FROM ANOTHER PRIVATE BANK ACCOUNT FOR THE RECEIPTS FROM OFFICERS AND OTHERS, AND USED DIRECT FOR PAY ROLLS AND SUPPLIES OF THE LAUNDRY, DOES NOT REMOVE THEM FROM THE CONTROL OF THE GOVERNMENT OR RENDER THEM NONACCOUNTABLE FUNDS. THEIR VERY USE IN THE MANNER AND FOR THE PURPOSE DESCRIBED PLACES THEM ON THE SAME FOOTING AS THE APPROPRIATED AMOUNT. THE RESULT IS AN INDIRECT OR TECHNICAL APPROPRIATION OF THE RECEIPTS TO THE SAME USE AS THE AMOUNT APPROPRIATED FROM THE GENERAL FUND.

CONTRARY TO THE ADVICE APPARENTLY FURNISHED TO THE COMMISSION BY THE NAVY DEPARTMENT THAT THE COMPTROLLER GENERAL HAD CONCURRED IN THE NAVY DEPARTMENT'S VIEW THAT THE LAUNDRY FUND WAS NOT A FEDERAL TRUST FUND, THERE IS NO RECORD IN THIS OFFICE THAT THE COMPTROLLER GENERAL OF THE UNITED STATES HAS EXPRESSED ANY VIEWS ON THE SUBJECT. HOWEVER, THIS MATTER, AS WELL AS THE DUAL COMPENSATION STATUS OF LIEUT. WILLIAM G. SULLIVAN, RETIRED, MANAGER OF THE NAVAL ACADEMY LAUNDRY, UNDER THE TERMS OF SECTION 212 OF THE ECONOMY ACT WILL BE GIVEN FURTHER CONSIDERATION IN A SEPARATE COMMUNICATION TO THE SECRETARY OF THE NAVY.

QUESTION 1 IS ANSWERED IN THE AFFIRMATIVE.

QUESTION 2 INVOLVES PRIMARILY APPLICATION OF THE CIVIL SERVICE LAWS AND REGULATIONS TO A PARTICULAR CLASS OF EMPLOYEES. THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE FOR MANY YEARS CONCEIVED IT NOT TO BE WITHIN THE SCOPE OF THE DUTIES AND RESPONSIBILITIES IMPOSED UPON THEM BY LAW TO DETERMINE IN ANY CASE WHETHER THE CIVIL SERVICE LAWS AND REGULATIONS ARE REQUIRED TO BE FOLLOWED IN MAKING APPOINTMENTS OF FEDERAL PERSONNEL. SUCH CIRCUMSTANCES I MUST DECLINE TO ANSWER THE SECOND QUESTION.