Legal Expense Fund – Missouri House of Representatives Newsroom

Legislature’s budget aims for transparency in settlements with the state, agency workplace environments

The legislature has passed a budget that aims to make state agencies more accountable when lawsuits against them cost taxpayer dollars.

House Minority Leader Gail McCann Beatty made creating transparency with the legal expense fund one of her priorities this session. (photo; Tim Bommel, Missouri House Communications)

Lawmakers learned last fall that the Department of Corrections had reached millions of dollars in settlements in recent years with employees who had been harassed, discriminated against, and in some cases retaliated against. Legislators said they didn’t know about apparent ongoing issues in Corrections because of how money for settlements was identified in the budget.

Settlements had come out of a single line in the budget called the legal expense fund, which had no spending limit. That meant legislators did not know how much money was being spent on settlements each year, and agencies didn’t have to explain to the legislature what was behind lawsuits against them.

The budget for the year starting July 1 would cap that line at $16-million. If settlements exceed that, the Office of Administration can pull up to $10-million from other funds it controls. If that isn’t enough, OA can then take money directly from the budget of the department involved in a given settlement.

The Attorney General has said he will also report to the legislature every month on the activity of the legal expense fund. House Budget Committee Chairman Scott Fitzpatrick (R-Shell Knob) said that’s why even if OA has to go to any of those additional places for settlement money, it must all pass through that fund.

House Budget Committee Chairman Scott Fitzpatrick (photo; Tim Bommel, Missouri House Communications)

“So it still has to go to the legal expense fund and then it has to be paid from the legal expense fund, so that shouldn’t impact [tracking that fund’s activity],” said Fitzpatrick.

Meanwhile the House has passed a bill that would require by law those monthly reports from the governor, but with the process moving slowly in recent weeks, House Democrat Leader Gail McCann Beatty (Kansas City) said she’s looking for other bills to which she can add that language.

“The Attorney General has been very cooperative and is now posting that information on his website so it is there for the first time. I will be asking those other departments that don’t fall under the Attorney General to do the same voluntarily until we have the opportunity to actually pass this legislation,” said McCann Beatty.

Legislators believe that with the new budget provisions and reporting by the attorney general any future situations like that uncovered at Corrections will be exposed.

Meanwhile, a House subcommittee launched to investigate corrections and recommend changes in that department is close to releasing its report.

The legislature’s budget proposal is now awaiting action by Governor Eric Greitens (R).

House votes to require monthly reporting on settlements in cases against Missouri

The House has voted to increase transparency when lawsuits against state agencies are settled. The legislation was prompted by the revelation that millions of tax dollars were paid out over several years in settling harassment and discrimination cases against the Department of Corrections.

Representative Paul Fitzwater (R-Potosi) carried HCB 7 on the House Floor. (photo; Tim Bommel, Missouri House Communications)

House Committee Bill 7 would require the attorney general to report every month to the legislature and others about how the state’s legal expense fund – the fund from which money for settlements is taken – has been used.

Those cases against Corrections came to light late last year when an article on Pitch.com detailed several of them, and outlined how employees who complained about being harassed or discriminated against were victims of retaliation by fellow Corrections staff members.

House members said after the article came out that they were unaware of the settlements because those have been paid out of a line in the budget that has no spending limit on it. That meant departments never had to come to the legislature and justify how much their settlement agreements were costing the state.

St. Charles Republican Kathie Conway, who chairs the appropriations committee that oversees Corrections, said this bill is needed.

“This is something that needs to be in statute so that the legislature is not caught unaware of all the goings on in different departments,” said Conway.

House Democrat Leader Gail McCann Beatty hopes to prevent state employees who have complained of harassment or discrimination from having to sign gag orders as part of court settlements. (photo; Tim Bommel, Missouri House Communications)

House Democrat leader Gail McCann Beatty (Kansas City) proposed that the reporting should cover all state agencies and not just the Department of Corrections. She said the reporting requirements could lead the legislature to make changes in policies or laws to address issues resulting in lawsuits in other agencies.

She hopes the legislature will go further and address the signing of gag orders by state employees who complain of harassment or discrimination, as some in the Corrections cases did under the terms of their settlements.

“While we can sunshine and get this information it does not give that employee the opportunity to give their side,” said McCann Beatty.

Missouri Attorney General Josh Hawley (R) announced in March he would begin monthly reporting on the activity of the legal expense fund. Legislators praised his decision but said HCB 7 is still needed to ensure future attorneys general will follow suit.

Hawley’s first such report comes out April 30.

HCB 7 would also require the Department of Corrections’ director to meet with the House’s committee overseeing that department twice each year to discuss issues with that department.

The House voted 150-1 to send the bill to the Senate, but only two weeks remain in the legislative session for that body to consider it.

Bill seeks better oversight of state settlements, after harassment in Corrections Department

House lawmakers shocked by what some have called an environment of harassment and retaliation in the Department of Corrections are considering a bill they hope will let the legislature know when such situations are present.

Minority Leader Gail McCann Beatty presents House Bill 858 to the House Budget Committee. (photo; Tim Bommel, Missouri House Communications)

An article on Pitch.com detailed numerous reports of employee-on-employee harassment in Corrections, including cases of retaliation against those who reported it. Some cases resulted in lawsuits that have cost the state millions in settlements and more cases are pending.

House Minority Leader Gail McCann Beatty (D-Kansas City) has filed a House Bill 858, which would require the Attorney General to report to the General Assembly every month on activity concerning the state’s Legal Expense Fund. That’s the fund from which the state pays all defense costs, including all settlements.

McCann Beatty and others say such reports would inform the legislature when there are problems in state agencies such as those coming to light in Corrections.

“We can’t possibly address the issue if we don’t know what’s happening,” McCann Beatty told the House Budget Committee, of which she was formerly a member.

As House Communications reported in December, lawmakers say they didn’t know about the repeated incidents of harassment in part because the Legal Expense Fund has for years had an open-ended dollar amount in it. The line included an “E,” for “estimate,” which meant if expenses in that line exceeded what the legislature budgeted, more money could be spent on it.

That meant even though multiple lawsuits stemming from harassment cases in Corrections were being litigated and settled, the Department never had to come before the legislature and explain or justify the additional expense.

Budget makers plan to remove that “E” so that similar situations will have to be explained to the legislature in the future, but McCann Beatty’s proposal would require further accounting.

“It allows us to monitor what is going out of that fund so that we can see patterns, and see if there’s a problem,” said McCann Beatty.

Lawmakers say such oversight could reveal similar recurring problems in other state agencies. McCann Beatty gave the Budget Committee information from the Attorney General’s Office showing the state had spent about $60-million on settlements in the past five years, though the legislature had only appropriated about $30-million for legal expenses.

In the fiscal year that began July 1, the Attorney General’s Office reports Missouri has expended more than $17-million in 24 settlements and 4 judgments. Those settlements include 16 discrimination or retaliation claims among seven state agencies.

“I think if you look at that list you will see that these lawsuits – it is not simply the Department of Corrections, but in fact it is a statewide issue,” said McCann Beatty. “As a legislature I think all of us want to see that climate changed.”

The budget committee is expected to vote on McCann Beatty’s bill tomorrow.