A-46794, JANUARY 31, 1933, 12 COMP. GEN. 513

A-46794: Jan 31, 1933

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FOR VOCATIONAL EDUCATION ARE AVAILABLE FOR PAYMENTS TO THE STATE OF CALIFORNIA FOR THE FULL SALARY OF . ARE NOT AVAILABLE FOR ANY ADDITIONAL AMOUNTS CONTRIBUTED DIRECTLY BY THE STATE TOWARD THE RETIREMENT ANNUITIES OF ITS TEACHERS. SECTION 12 RELATES TO THE CONDITIONS UNDER WHICH THE MONEYS THUS ALLOTTED ARE TO BE EXPENDED. DURING THE PAST YEAR A STATE RETIREMENT SYSTEM WAS STARTED AND A RETIREMENT FUND WAS CREATED. THIS RETIREMENT FUND IS BUILT UP BY CONTRIBUTIONS FROM TWO SOURCES: (1) STATE EMPLOYEES. "CERTAIN PORTION OF THE MONTHLY SALARY OF EACH STATE EMPLOYEE IS WITHHELD EACH MONTH AND PLACED IN THE RETIREMENT FUND AS HIS CONTRIBUTION. THIS WILL BE RETURNED TO HIM IF HE LEAVES THE SERVICE BEFORE REACHING THE AGE OF RETIREMENT.

A-46794, JANUARY 31, 1933, 12 COMP. GEN. 513

APPROPRIATIONS - VOCATIONAL EDUCATION - RETIREMENT OF STATE EMPLOYEES FEDERAL FUNDS APPROPRIATED UNDER AUTHORITY OF THE ACT OF FEBRUARY 23, 1917, 39 STAT. 931, FOR VOCATIONAL EDUCATION ARE AVAILABLE FOR PAYMENTS TO THE STATE OF CALIFORNIA FOR THE FULL SALARY OF ,TEACHERS, SUPERVISORS AND DIRECTORS OF AGRICULTURAL SUBJECTS AND TEACHERS OF TRADE AND INDUSTRIAL AND HOME ECONOMICS SUBJECTS" INCLUDING THE PART DEDUCTED AND/OR SET ASIDE AS THE TEACHER'S CONTRIBUTION TOWARDS RETIREMENT, BUT ARE NOT AVAILABLE FOR ANY ADDITIONAL AMOUNTS CONTRIBUTED DIRECTLY BY THE STATE TOWARD THE RETIREMENT ANNUITIES OF ITS TEACHERS.

COMPTROLLER GENERAL MCCARL TO THE CHAIRMAN OF THE FEDERAL BOARD FOR VOCATIONAL EDUCATION, JANUARY 31, 1933:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF JANUARY 13, 1933, AS FOLLOWS:

AT THE MEETING OF THE FEDERAL BOARD FOR VOCATIONAL EDUCATION HELD ON JANUARY 11, A QUESTION AROSE FROM AN AUDIT OF THE CALIFORNIA EXPENDITURES OF FEDERAL MONEY FOR VOCATIONAL EDUCATION WHICH THE BOARD DIRECTED ME TO PRESENT TO YOU FOR AN OPINION.

UNDER PUBLIC NO. 347, 64TH CONGRESS, APPROVED FEBRUARY 23, 1917, SECTION 4 APPROPRIATES A SUM OF MONEY TO BE ALLOTTED TO THE STATES FOR THE PREPARATION OF "TEACHERS, SUPERVISORS, AND DIRECTORS OF AGRICULTURAL SUBJECTS AND TEACHERS OF TRADE AND INDUSTRIAL AND HOME ECONOMICS SUBJECTS * * *.' SECTION 12 RELATES TO THE CONDITIONS UNDER WHICH THE MONEYS THUS ALLOTTED ARE TO BE EXPENDED.

OUR AUDITOR IN AUDITING THE CALIFORNIA ACCOUNTS FOR THE FISCAL YEAR ENDING JUNE 30, 1933, INCLUDES IN HIS AUDIT THE FOLLOWING STATEMENTS:

"J. ONE SITUATION HAS ARISEN ABOUT WHICH I AM UNCERTAIN. DURING THE PAST YEAR A STATE RETIREMENT SYSTEM WAS STARTED AND A RETIREMENT FUND WAS CREATED. THIS RETIREMENT FUND IS BUILT UP BY CONTRIBUTIONS FROM TWO SOURCES: (1) STATE EMPLOYEES, AND (2) THE STATE.

"CERTAIN PORTION OF THE MONTHLY SALARY OF EACH STATE EMPLOYEE IS WITHHELD EACH MONTH AND PLACED IN THE RETIREMENT FUND AS HIS CONTRIBUTION. THIS WILL BE RETURNED TO HIM IF HE LEAVES THE SERVICE BEFORE REACHING THE AGE OF RETIREMENT. THE STATE MAKES A SIMILAR CONTRIBUTION TO THE FUND BUT THIS MONEY REMAINS THE PROPERTY OF THE STATE UNLESS USED TO PAY RETIREMENT ALLOWANCES. THE STATE CONTRIBUTION FOR THE BENEFIT OF THOSE PERSONS CARRIED ON THE STATE VOCATIONAL DIVISION PAY ROLLS DURING THE PAST YEAR AMOUNTED TO $810.18 AND WAS PAID FROM "CLASS C" VOCATIONAL EDUCATION FUNDS. THIS "CLASS C" FUND CONTAINS THE SMITH-HUGHES TEACHER-TRAINING MONEY, TOGETHER WITH AN EQUAL AMOUNT OF STATE MONEY. THE PAYMENT OF $810.18 WAS THEREFORE $405.09 STATE AND $405.09 FEDERAL.

"I AM UNCERTAIN AS TO WHETHER IT IS PROPER TO DRAW ON THE "CLASS C" FUND- -- THE FUND CONTAINING THE STATE AND FEDERAL MONEY FOR TRAINING OF VOCATIONAL TEACHERS--- TO PAY FOR THE STATE'S CONTRIBUTION TO THE RETIREMENT FUND. I CAN SEE NO OBJECTION TO THE PRACTICE OF WITHHOLDING A PORTION OF THE MONTHLY SALARY OF EACH EMPLOYEE PAID FROM VOCATIONAL FUNDS, SINCE THIS MONEY HAS BEEN EARNED BY THE EMPLOYEE AND REMAINS HIS PROPERTY. THE CONTRIBUTION OF THE STATE IS, HOWEVER, AN ADDITIONAL AMOUNT WHICH IS PROVIDED FOR FUTURE ALLOWANCES IN CASE OF THE RETIREMENT OF THE EMPLOYEE. IT IS NOT A PAYMENT FOR SALARY, SINCE THE EMPLOYEE HAS ALREADY BEEN PAID IN FULL. IT IS SIMPLY A PROVISION BY THE STATE FOR THE FUTURE BENEFIT OF RETIRED WORKERS. IT IS A PAYMENT NOW FOR AN ALLOWANCE TO BE PAID IN FUTURE YEARS.

"IF IT IS NOT PERMISSIBLE TO USE FEDERAL MONEY FOR THIS PURPOSE THE ANNUAL REPORT SHOULD BE CHANGED TO SHOW THESE EXPENDITURES AND THE PAYMENT OF $405.09 SHOULD BE DISALLOWED AND WITHHELD FROM THE APPORTIONMENT FOR NEXT YEAR. SINCE THIS INVOLVES A QUESTION OF POLICY, I AM MAKING NO RECOMMENDATION BUT AM ONLY REPORTING THE FACTS AS I LEARNED THEM.'

IT APPEARS FROM THE INFORMATION SUBMITTED THAT THE RETIREMENT PLAN IN THE STATE OF CALIFORNIA IS SIMILAR TO THE PLAN OPERATED BY THE FEDERAL GOVERNMENT FOR CIVIL SERVICE EMPLOYEES, IN THAT A CERTAIN PORTION OF THE MONTHLY SALARY OF EACH STATE EMPLOYEE IS WITHHELD EACH MONTH AND PLACED IN THE RETIREMENT FUND AS HIS CONTRIBUTION, THIS SUM TO BE RETURNED TO HIM IF HE LEAVES THE SERVICE BEFORE REACHING THE AGE OF RETIREMENT, AND THAT THE STATE MAKES A SIMILAR CONTRIBUTION TO THE FUND BUT THIS MONEY REMAINS THE PROPERTY OF THE STATE UNLESS SUBSEQUENTLY USED TO PAY RETIREMENT ALLOWANCES.

IT MAY BE ASSUMED THAT THE STATE OF CALIFORNIA JUSTIFIES SUCH PAYMENTS INTO THE RETIREMENT FUND, OUT OF THE JOINT STATE AND FEDERAL FUND, ON THE GROUND THAT SUCH PAYMENTS ARE LEGITIMATE AND NECESSARY CURRENT EXPENDITURES OF THE STATE FOR MAINTENANCE OF VOCATIONAL TEACHER TRAINING UNDER THE CALIFORNIA STATE PLAN FOR VOCATIONAL EDUCATION. UNDER THE FEDERAL VOCATIONAL EDUCATION ACT OF 1917 ANY EXPENDITURES, WHICH MAY BE PROPERLY SO CLASSIFIED ARE ELIGIBLE FOR REIMBURSEMENT OUT OF FEDERAL FUNDS.

THE OPINIONS DESIRED ARE AS FOLLOWS:

1. CAN THE FEDERAL BOARD FOR VOCATIONAL EDUCATION APPROVE AS A BONA FIDE EXPENDITURE OF FEDERAL MONEY THAT PORTION OF THE MONTHLY SALARY OF EACH STATE EMPLOYEE WHICH IS WITHHELD EACH MONTH AND PLACED IN THE RETIREMENT FUND AS THE EMPLOYEE'S CONTRIBUTION?

2. CAN THE FEDERAL BOARD FOR VOCATIONAL EDUCATION APPROVE THE USE OF FEDERAL FUNDS FOR NOT TO EXCEED ONE-HALF OF THE CONTRIBUTION TO THE RETIREMENT FUND WHICH THE STATE MAKES?

AN EARLY OPINION ON THESE TWO QUESTIONS WILL BE APPRECIATED.

SECTIONS 4, 9, AND 12 OF THE ACT OF FEBRUARY 23, 1917, 39 STAT. 931, 933, AND 935, CONTAIN THE FOLLOWING PROVISIONS:

SEC. 4. THAT FOR THE PURPOSE OF COOPERATING WITH THE STATES IN PREPARING TEACHERS, SUPERVISORS, AND DIRECTORS OF AGRICULTURAL SUBJECTS AND TEACHERS OF TRADE AND INDUSTRIAL AND HOME ECONOMICS SUBJECTS THERE IS HEREBY APPROPRIATED FOR THE USE OF THE STATES FOR THE FISCAL YEAR ENDING JUNE THIRTIETH, NINETEEN HUNDRED AND EIGHTEEN, THE SUM OF $500,000; FOR THE FISCAL YEAR ENDING JUNE THIRTIETH, NINETEEN HUNDRED AND NINETEEN, THE SUM OF $700,000; FOR THE FISCAL YEAR ENDING JUNE THIRTIETH, NINETEEN HUNDRED AND TWENTY, THE SUM OF $900,000; FOR THE FISCAL YEAR ENDING JUNE THIRTIETH, NINETEEN HUNDRED AND TWENTY-ONE, AND ANNUALLY THEREAFTER, THE SUM OF $1,000,000. SAID SUMS SHALL BE ALLOTTED TO THE STATES IN THE PROPORTION WHICH THEIR POPULATION BEARS TO THE TOTAL POPULATION OF THE UNITED STATES, NOT INCLUDING OUTLYING POSSESSIONS, ACCORDING TO THE LAST PRECEDING UNITED STATES CENSUS: * * *

SEC. 9. THAT THE APPROPRIATION FOR THE SALARIES OF TEACHERS, SUPERVISORS, OR DIRECTORS OF AGRICULTURAL SUBJECTS AND OF TEACHERS OF TRADE, HOME ECONOMICS, AND INDUSTRIAL SUBJECTS SHALL BE DEVOTED EXCLUSIVELY TO THE PAYMENT OF SALARIES OF SUCH TEACHERS, SUPERVISORS, OR DIRECTORS HAVING THE MINIMUM QUALIFICATIONS SET UP FOR THE STATE BY THE STATE BOARD, WITH THE APPROVAL OF THE FEDERAL BOARD FOR VOCATIONAL EDUCATION. * * *

SEC. 12. THAT IN ORDER FOR ANY STATE TO RECEIVE THE BENEFITS OF THE APPROPRIATION IN THIS ACT FOR THE TRAINING OF TEACHERS, SUPERVISORS, OR DIRECTORS OF AGRICULTURAL SUBJECTS, OR OF TEACHERS OF TRADE, INDUSTRIAL OR HOME ECONOMICS SUBJECTS, THE STATE BOARD OF SUCH STATE SHALL PROVIDE IN ITS PLAN FOR SUCH TRAINING THAT THE SAME SHALL BE CARRIED OUT UNDER THE SUPERVISION OF THE STATE BOARD; THAT SUCH TRAINING SHALL BE GIVEN IN SCHOOLS OR CLASSES UNDER PUBLIC SUPERVISION OR ONTROL; THAT SUCH TRAINING SHALL BE GIVEN ONLY TO PERSONS WHO HAVE HAD ADEQUATE VOCATIONAL EXPERIENCE OR CONTACT IN THE LINE OF WORK FOR WHICH THEY ARE PREPARING THEMSELVES AS TEACHERS, SUPERVISORS, OR DIRECTORS, OR WHO ARE ACQUIRING SUCH EXPERIENCE OR CONTACT AS A PART OF THEIR TRAINING; AND THAT THE STATE BOARD, WITH THE APPROVAL OF THE FEDERAL BOARD, SHALL ESTABLISH MINIMUM REQUIREMENTS FOR SUCH EXPERIENCE OR CONTACT FOR TEACHERS, SUPERVISORS, OR DIRECTORS OF AGRICULTURAL SUBJECTS AND FOR TEACHERS OF TRADE, INDUSTRIAL, AND HOME ECONOMICS SUBJECTS; THAT NOT MORE THAN SIXTY PERCENTUM NOR LESS THAN TWENTY PERCENTUM OF THE MONEY APPROPRIATED UNDER THIS ACT FOR THE TRAINING OF TEACHERS OF VOCATIONAL SUBJECTS TO ANY STATE FOR ANY YEAR SHALL BE EXPENDED FOR ANY ONE OF THE FOLLOWING PURPOSES: FOR THE PREPARATION OF TEACHERS, SUPERVISORS, OR DIRECTORS OF AGRICULTURAL SUBJECTS, OR THE PREPARATION OF TEACHERS OF TRADE AND INDUSTRIAL SUBJECTS, OR THE PREPARATION OF TEACHERS OF HOME ECONOMICS SUBJECTS.

ON THE BASIS OF THE FACTS STATED IN YOUR LETTER, THERE CAN BE NO QUESTION AS TO THE AVAILABILITY OF FEDERAL FUNDS APPROPRIATED UNDER AUTHORITY OF THIS STATUTE FOR THE FULL SALARY OF ,TEACHERS, SUPERVISORS, AND DIRECTORS OF AGRICULTURAL SUBJECTS, AND TEACHERS OF TRADE AND INDUSTRIAL AND HOME ECONOMICS SUBJECTS," INCLUDING THE PART DEDUCTED AND/OR SET ASIDE AS THE TEACHER'S CONTRIBUTION TOWARD HIS RETIREMENT. IT IS WELL SETTLED THAT THE AMOUNT OF RETIREMENT DEDUCTION FROM SALARIES OF FEDERAL EMPLOYEES UNDER THE PROVISIONS OF THE CIVIL RETIREMENT ACT, WHICH IS DEPOSITED TO THE CREDIT OF THE EMPLOYEES IN THE RETIREMENT FUND, DOES NOT LOSE ITS IDENTITY OR STATUS AS COMPENSATION FOR SERVICES RENDERED. IF, AS REPORTED IN YOUR LETTER, THE CALIFORNIA RETIREMENT LAW CONTAINS SUBSTANTIALLY THE SAME PROVISIONS IN THIS RESPECT AS THE FEDERAL LAW, THE SAME CONCLUSION IS JUSTIFIED, AND ON THAT ASSUMPTION, YOUR FIRST QUESTION MAY BE ANSWERED IN THE AFFIRMATIVE.

HOWEVER, THE SAME CONCLUSION IS NOT AUTHORIZED AS TO THE ADDITIONAL AMOUNT CONTRIBUTED DIRECTLY BY THE STATE TOWARD THE RETIREMENT ANNUITIES OF ITS EMPLOYEES. THIS ADDITIONAL AMOUNT DOES NOT CONSTITUTE COMPENSATION OF EMPLOYEES FOR SERVICES RENDERED, BUT IS IN THE NATURE OF A GRATUITY OR PENSION, NO BENEFIT FROM WHICH IS TO BE RECEIVED BY THE TEACHER UNLESS AND UNTIL RETIRED. SECTION 9 OF THE STATUTE ABOVE QUOTED SPECIFICALLY PROVIDES THAT THE FEDERAL APPROPRIATION FOR SALARIES OF TEACHERS, ETC., "SHALL BE DEVOTED EXCLUSIVELY TO THE PAYMENT OF SALARIES.' ACCORDINGLY, YOUR SECOND QUESTION IS ANSWERED IN THE NEGATIVE.