1968 O. A. G.

OFFICIAL OPINION NO.

March 27, 1968

ACCOUNTS, STATE BOARD OF-MENTAL HEALTH-Examination of Records of Community Psychiatric

Clinics or Mental Health Centers

Opinion Requested by Mr. Richard L. Worley, State Ex-aminer.

I am in receipt of your request for an Opinion concerningthe authority of the State Board of Accounts to examine therecords and accounts of community psychiatric clinics andcommunity mental health centers. In relation to such insti-tutions you ask the following questions:

1. Does the State Board of Accounts have authorityto examine the records and accounts of organiza-tions defined in Ch. 164, Acts 1959 , as amendedif such organizations receive financial assistancefrom a county?

2. If the answer to question numbered one (1), isin the affrmative, is it the duty of the StateBoard of Accounts to examine such records andaccounts?

3. Does the State Board of Accounts have authorityto examine the records and accounts of organi-zations defined in Ch. 48, Acts 1965, as amended,if such organizations receive financial assistance

from a county?4. If the answer to question numbered three (3) is

in the affrmative, is it the duty of the StateBoard of Accounts to examine such records andaccounts?

5. If your answers to the foregoing questions are tothe effect that the State Board of Accounts hasthe authority to examine the records and ac-

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counts of organizations referred to in questions

numbered one (1) and three (3), will such or-ganizations be required to pay the full cost ofexamination or at the rate charged to govern-mental units operating on tax revenues?If it is your opinion that the records and ac-counts referred to are subject to examination bythe State Board of Accounts, does this offce haveauthority to prescribe uniform accounting rec-ords for the subject agencies and require thatthe same be kept?"

1. Acts 1959, ch. 164, as amended by Acts 1967, ch. 42the same being Burns IND. STAT. ANN. SS 22-3009 through22-3011 , authorizes county aid to community psychiatric clin-ics. The first section of the Act, Burns S 22-3009, definesthe term "community psychiatric clinic" thusly:

4' .

As used in this act, the term 'community psychi-atric clinic' shan mean any psychiatric clinic incor-porated under the provisions of 'The Indiana GeneralNot for Profit Corporation Act, ' the same being Chap-ter 157 of the Acts of the Indiana General Assemblyof 1935 , which clinic is organized and operated solelyfor the purpose of providing psychiatric services toresidents of any specific county.

Thus, the institutions involved are privately owned.The second section of the Act, as amended, Burns S 22-

3010 , provides:

The board of county commissioners of a countymay authorize the furnishing of financial assistanceto any community psychiatric clinic or other commu-nity facilities and services for the mentally ill, such

, but not limited to, halfway houses, day care cen-ters and residential centers located, or which mayhereafter be located in the county; and the countycouncil of the county, upon the request of the boardof county commissioners, may appropriate annually,from the general fund of the county, funds to pro-

1968 O. A. G.

vide such financial assistance in an amount of not toexceed the amount which could be collected from theannual levy of a five cent (5 ) tax on each one hun-

dred dollars ($100) valuation of taxable property.

The third section of the Act, as amended, Burns S 22-3011authorizes a county that has no community psychiatric clinicwithin its confines to provide financial assistance to such aclinic in another county.

The situation, then, is one wherein a privately owned in-stitution is supported at least in part by monies derivedfrom tax levies.

The State Board of Accounts is created by, and its author-ity basically described by Chapter 55 of Acts 1909. Section

17 of that Act, the same being Burns S 60-219, containsseveral definitions, including:

The term 'municipality,' as used in this act, shallbe construed to extend to, include and mean anycounty, township, city, town, school town, school town-ship, or school city in this state.

. . .

The term 'publicinstitution, ' as used in this act, shall be construed toextend to, include and mean any institution or publicservice industry maintained in whole or in part atpublic expense or supported in whole or in part by

appropriations or public funds or by taxation. Theterm 'public service industries ' as used in this act,shall be construed to extend to, include and mean anyand all public service industries owned either directlyby the municipality or to the support of which munic-ipality contributes from public funds, or the capitalstock of which the municipality may be the ownerof any part, or the bonds of which may be, owned orguaranteed by the municipality.

The powers and duties of the State Examiner of the StateBoard of Accounts, who is the principal offcer of that Board(see section 1 , Burns S 60-201), are set out in section 9 of theAct, as amended by Acts 1945, ch. 176, S 3, the same beingBurns S 60-211 , which provides in part:

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It shall be the duty of the state examiner, and he

is given full power to examine personally or throughthe deputy examiners and field examiners, all 'accountsand all financial affairs of every public offce and of-ficer and of every public institution, including all stateoffces and state institutions, and shall make such ex-amination at least once each year. On every such ex-amination inquiry shall be made as to the financialcondition and resources of each municipality or insti-tution, whether the laws of the state and the require-ments of the state board of accounts have been com-plied with, and into the methods and accuracy of theaccounts and reports of he offce examined. . . .

...,..

The question, then, is whether a privately owned institu-tion s acceptance from a county of monies raised by taxeswill make the accounts and records of that institution subj ectto audit by the Stahf'Board of Accounts.

A similar situation was considered in 1953 O. G. p. 492

wherein the Attorney General was asked whether the StateExaminer had the authority to examine "all accounts andfinancial affairs of hospital operated by an 'associationwhich has been incorporated as a corporation not for profitand where such hospital is maintained in part by public fundsraised by taxation.

After noting that this hospital, classified by its directorsas a privately owned private institution, had received overseventy-five thousand dollars in aid from the city in thepreceding three years, the Attorney General concluded:

Your question must be answered in the affrmativesince for purposes of the Public Accounting Law, citedand quoted 'above, the General Hospital Associationof Elkhart, Indiana must be construed to be a publicinstitution. It is unimportant in answering this ques-tion to determine whether it is a public or privatecorporation for the reason that if it accepts appro-priations of public or tax funds it thereby becomessubject to examination by reason of thereby becomingincluded within the statutory definition of public in-

1968 O. A. G.

stitutions for the purpose of the Public AccountingLaw. "

That opinion I consider to be an accurate interpretationof the law, and in accord with that opinion I conclude that acommunity psychiatric clinic which accepts financial assistancefrom a county becomes a public institution subject to auditby the State Board of Accounts.

2. In answer to your second question I shall again set outa portion of Acts 1909, ch. 55, S 9 , as, amended by Acts 1945ch. 176, S 3, the same being Burns S 60-211:

It shall be the duty of the staJe examiner, and heis given full power to examine personally or throughthe deputy examiners and field examiners, all accountsand all financial affairs of every public offce and of-ficer and of every pub! institution, including all stateoffces and state institutions, and shall make such ex-amination at least once each year.

Thus, the very same statute that confers upon the StateExaminer the authority to examine the records of communitypsychiatric clinics that accept assistance from counties im-poses upon the State Examiner the positive duty of doingso annually. The language is so explicit that interpretationis unnecessary and further discussion would be redundant.

3. Chapter 48 of Acts 1965, as amended by Acts 1967, ch.149 , the same being Burns SS 22-3014 through 22-3018, author-izes counties to furnish financial assistance to communitymental health centers and community mental retardation cen-ters. Said centers are defined in the first section of the ActBurns S 22-3015, thusly:

As used in this act the terms 'community mentalhealth center' and ' community mental retardation cen-ter' shall mean a program of services approved by thedepartment of mental health and organized for the pur-pose of providing multiple services for the mentallydisordered 'and operated by one of the following orcombinations thereof.

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1. Any city, town, county or other political sub-division of this state; any agency of the State of Indi-ana or of the United States; and any political subdivi-sion of another state; including but not limited to andwithout limiting the generality of the foregoing, hos-pitals owned or operated by units of government andbuilding authorities organized for the purpose of con-structing facilities to be leased to units of government;

2. A corporation incorporated under the provi-sions of the 'Indiana General Not for Profit Corpora-tion Act' ;

3. A non-profit corporation incorporated in an-other state; and

4. A university or college.

The second section of the Act, Burns S 22-3014, authorizesa county to fUl"XJ,ish financial assistance to centers locatedwithin the county; the third section of the Act, Burns S 22-3016 authorizes two or more counties to provide financialassistance to such center that is established to provide

service to such counties no matter in which county it is lo-cated; section five of the Act, Burns S 22-2018, authorizescounties to issue bonds to provide funds for such centers as

authorized in sections two and three; and section four of theAct, Burns S 22-3017, authorizes a county to provide financialassistance to such center located in a state other than

Indiana if such center provides service to the residents of thatIndiana county.

For the reasons given in answer to your first question, itis my opinion that any such center that receives financialassistance from a county is a public institution subject toaudit by the State Board of Accounts.4. The answer to your fourth question is governed by

the same principles as is the answer to your second ques-tion. It is the duty of the State Board of Accounts to examinethe records and accounts of community mental health cen-ters and community retardation centers that receive financialassistance from one or more counties. However, I would liketo interject a limiting factor that is also, although not sodirectly, applicable to your second question.

1968 O. A. G.

Some of the institutions eligible to receive financial as-sistance for the operation of a community mental healthcenter or mental retardation center are large and complexand the center they operate may represent a minor portionof their activities. A privately owned university or collegefor instance, might enroll thousands of students, and itsrecords and accounts would reflect tuition receipts, scholar-ships , endowments, research grants, faculty salaries, buildingfunds, athletic events, and a multitude of other equally di-verse debits and credits. If that university or college wereto operate a mental health center or a mental retardationcenter as a semi-autonomous division or department of theuniversity, and were to keep separate q.fid complete recordsand 'accounts reflecting the activities of that center, thanI believe the annual audit need not involve accounts otherthan those of the center. This qualification is not intended tolimit the authority of the St.fJte Board of Accounts to inves-tigate and audit the entire records of the institution shouldit deem such action necessary, but rather to suggest thatthe positive duty of examination would be satisfied by theaudit of the separate account.

5. Payment for the cost of audits by the State Boardof Accounts is regulated by Acts 1945, ch. 15, S 3, the same

being Burns S 60-216, a rather lengthy statute which provides:

The expense of examination and investigation ofpublic accounts shall be paid by each municipality forthe examination and investigation of its accounts hereinafter provided.

The state examiner shall not later than the tenthday of January of each year certify to the auditor ofeach county the number of days actually served by fieldexaminers in examining the records of each taxing unittogether with the amount chargeable to each taxingunit within the county for such examinations at the

rate of ten dollars per day for each field examinerengaged in making such examinations. Immediatelyupon receipt of such certified statement, the countyauditor shall issue his warrant on the county treasurerpayable to the treasurer of state out of the general

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fund of the county for the amount stated in said cer-tificate, and said county general fund, except as to theexpense of examination and investigation of countyoffces, to be reimbursed by the county auditor out ofthe money due such taxing units at next semi-annualsettlement of the collection of taxes.

In the event the county to whom such claim maybe made shall not have possession or collection ofsuch funds due or to be due to any municipality theaffairs of which are examined, then such certificateshall be filed with, and such warrant shall be drawnby, the disbursing offcer of such municipality havingauthority to draw wa,rrants upon its funds and saidwarrant shall be paid 'forthwith. The said money whenreceived by the treasurer of state shall be deposited

to the credit of the state general fund.It shalt also be the duty of the state examiner to

certify, not later than the tenth day of January ofeach year to the proper disbursing offcer the totalamount of expense incurred by the examination ofany unit of state government which is now or mayhereafter by law be required to bear the costs of itsown examination and operating expense or of any util-ity owned or operated by any municipality or any de-partment thereof, which utility is operated from re-venues or receipts other than taxation, and uponreceipt of such certificate such unit of state govern-ment or utility shall immediately pay to the treasurerof state the amount so charged. The said money whenreceived by the treasurer of state shall be deposited

to the credit of the state general fund.It shall also be the duty of the state examiner to

certify to the county auditor the costs of typing re-ports of examination of each taxing unit within the

county; to each unit of state government which is nowor may hereafter by law be required to bear the costsof its own examination and operating expense and toeach utility owned or operated by any municipality orany department thereof, which utility is operated fromrevenues or receipts other than taxation, and upon re-

1968 O. A. G.

ceipt of such certificate the county auditor or thedisbursing offcer of such unit of state government orutility shall issue a warrant or check payable to thestate examiner for the total amount thereof. Thatthere be and is hereby created a revolving fund inthe hands of the state examiner to be used by himfor the payment of the expense of typing reports examination. The money, as 'above provided, when re-ceived shall be receipted into said revolving fund.

The term 'unit of state government' as used inthis act shall mean, state offces, boards, commissionsdepartments, societies, associations, services, under-takings and funds.

:r-

The statute above specifies that revenue supported mu-nicipal utilities and those units of state government requiredby law to do so shall pay for their own audit at the actualcost thereof. The institutiona'. presently under considerationdo not fall into either of those categories.

The statute also speaks of municipalities and "taxingunits " categories which also do not directly include the in-stitutions under consideration. The term "municipalitydefined by section 17 of the Act (Burns S 60-219) as "anycounty, township, city, town, school town, school township, orschool city in this state." The term "taxing unit" is not de-fined. However, a close reading of the above statute revealsthat the terms "municipality

" '

and "taxing unit" are usedinterchangeably.

No other classification nor finer breakdown is provided.Thus the inevitable conclusion is that the "municipality" ortaxing unit" must bear the cost of the audit of any tax

supported semi-autonomous or autonomous division or de-partment of that municipality. For example, the cost of audit-ing the records and accounts of a Justice of the Peace isto be borne by the township of which he is an offcer.

The corollary to the conclusion above is that the institu-tions presently under consideration, being tax supported atleast in part, must be classified as autonomous departmentsof the counties supplying the tax monies, and that thosecounties, the "taxing units," must pay for the cost of the

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audit of such institutions at the rate of ten dollars per ex-aminer per day.

6. The authority of the State Board of Accounts to pre-scribe uniform accounting records is set out in section twoof the Public Accounting Act, as last amended by Acts 1945ch. 176, S 2, the same being Burns S 60-202, which provides:

The state board of accounts, with the approval ofthe governor and the auditor of state, shall formulate,prescribe and install a system of accounting and re-porting in conformity with the provisions of this Actwhich shan be uniform for every public offce andevery public account 9f the same class, and whichshall exhibit true accounts and detailed statements offunds collected, received and expended for or on ac-count of the public for any and every purpose what-ever, and by all public offcers, employees or otherpersons, a1f'd which shall show the receipt, use and dis-position of all public property, and the income, if any,derived therefrom; and shall show all sources of pub-lic income and the amounts due and received from eachsource, and shall show all receipts, vouchers and oth-er documents kept, or that may be required to bekept, necessary to separate to itself and prove thevalidity of every transaction; and they, with the ap-proval of the governor and auditor of state, shall for-mulate all statements and reports made or requiredto be made for the internal administration of the of-fice to which they pertain, and all reports publishedor that may be required to be made or published forfiling in the offce of state examiner or for the in-formation of the people, regarding any and all de-tails of the financial administration of public affairs;and they, with the approval of the governor and au-ditor, of state, shall from time to time make and en-force such changes in the system and forms of 'ac-counting and reporting as shall by them be deemedwise or as may become necessary in order to conformto law.

1968 O. A. G.

Also pertinent to your question is section 22 of the ActBurns 9 60-224, which provides:

It is hereby made the duty of the various offcersof the state and its institutions and municipalities toadopt ' and use the books, forms, records and systemsof accounting and reporting that shall be adopted bythe board of aceounts, when directed so to do by saidboard, and all forms, books and records necessarythereto shall be purchased by said offcers and in themanner now provided by law. Any offcer or personwho shall refuse to provide such books, forms, orrecords, or who shall fail or refuse to use them, or

who shall fail or refuse to kee:p the accounts of his

offce as directed by said board as provided hereinshall be guilty of a misdemeanor, and upon convic-tion, shall be fined not less than one hundred ($100)dollars and removed fro.m such offce.

The obvious and unambiguous intent of the preceding stat-utes is to establish a uniform accounting system for 'all pub-lic offces and to require all public offcers to follow that ac-counting syste'm. No mention is made of "public institutionsas defined in the Act, the class of institutions being dis-cussed herein. This omission can be contrasted with thatsection of the Act requiring annual reports, which providesin part:

The state examiner shall require from every munic-ipality and every public institution financial reportscovering the full period of each fiscal year, said reportsto be made respectively by the county auditor, town-ship trustee, city clerk, town clerk and secretary ofthe board of school trustees or commissioners for theirrespective municipalities, and by the superintendentsof public institutions, in accordance with the formsand methods herein provided for, which shall be uni-form for all accounts of the same class, which saidreports shall be prepared, verified and filed with thestate examiner within thirty days after the close ofeach fiscal year, which shall be December 31 of each

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year in all cases in which the fiscal year is not other-wise fixed by law. Such reports shall contain an ac-curate statement, in summarized form, of all collec-tions made by or receipts received by such munici-palities and institutions from all sources, all accountsdue the public treasury but not collected 'and of allexpenditures for every purpose and by what authorityauthorized. . . ." (Acts 1909, ch. 55, S 4; Burns S 60-204)

The above combination of statutes is an instance for the ap-plication of the principle stated (but not applied) in High-land Sales Corp. v. Vance 244Jnd. 20, 25, 186 N.E. 2d 682 , 685(1962) :

It is an elementary rule of statutory construc-tion, that when a definite provision is made with re-ference toi:one particular subdivision of a section ofthe law dealing with the identical subject matter asthe other subdivisions thereof and a similar referenceis omitted from the other subdivisions thereof aswell as from all of the rest of the section, the partic-ular reference is intended to apply solely to the sub-division in which it is contained and to exclude itsapplication from all of the rest. Cannon v. Towner70 N. Y. S. 2d 303, 312, 188 Misc. 955 (SupremeCourt, Special Term, 1947).

Since this carefully written Act specifically includes "pub-lic institutions" in that section requiring the filing of an-nual reports and does not mention such institutions in thosesections concerning the establishment of a uniform 'account-ing system, I can only conclude that the omission was inten-tional and that the State Board of Accounts does not havethe authority to prescribe uniform accounting records for theinstitutions considered herein.