Attorney General: The Honorable Nancy Wyman, Comptroller, State of Connecticut, 2004-011 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

July 27, 2004

The Honorable Nancy Wyman
Comptroller
State of Connecticut
55 Elm Street
Hartford, CT 06106

Dear Ms. Wyman:

This letter is in response to your request for a formal legal opinion concerning the legality of the Connecticut Development Authority's ("CDA") plan to pay its President and former Chairman, Arthur H. Diedrick, $170,794.52 for 2002.75 hours of claimed accumulated compensatory time when he resigns on August 1, 2004. You have also asked whether it was legal for Mr. Diedrick to have served as both the Chairman of the CDA Board and its President.

We conclude that the CDA has no legal authority to pay Mr. Diedrick's claimed accumulated compensatory time in the absence of validly adopted procedures and standards. No such rules have been in fact approved. Indeed, currently available information indicates that the decision on Mr. Diedrick was apparently ad hoc and unique, lacking necessary standards and failing to follow statutory requirements. It provided him in effect with a very substantial retroactive benefit, outside the original terms of his employment, without statutory authority. Moreover, the decision to grant any high level public official compensation time would be highly unusual and contrary to generally accepted policy in public employment. The payment is therefore barred.

Our answer to the second question will depend on an investigation we have begun—addressing related questions as well. This investigative effort focuses on the circumstances relating to Mr. Diedrick's position—who made the relevant decisions, how and why. With cooperation from the CDA, we hope to respond to these questions in the very near future.

We understand from your letter that in the Spring of 1995, Mr. Diedrick was appointed Chairman of the CDA Board by then Governor Rowland and, shortly thereafter, on May 17, 1995, was hired by the CDA Board to serve as its President. Thus, as of May 17, 1995, Mr. Diedrick was serving both as Chairman of the Board and President of the CDA. Upon the advice of counsel, the CDA amended its by-laws as of May 17, 1995, to permit this arrangement. Mr. Diedrick continued to serve as Chairman and President until February, 2003, after which he served only as President.

We further understand that when the CDA hired Mr. Diedrick as President, it was agreed that he would work a 28 hour work week, rather than the 35 hour week worked by full-time CDA employees, and that his salary would be prorated to reflect his part time status. Information supplied to us suggests that since May, 1995, Mr. Diedrick has kept track of all of the additional hours that he has worked at CDA beyond his 28 hour work week. The documents provided for our review do not specify whether these hours are limited to Mr. Diedrick's position as President, but for purposes of this opinion we will assume that they are.

Our review of documents provided to us indicates that CDA has no written compensatory time policy. Nevertheless, on May 19, 1999, then Chairman of the CDA Finance Committee, L. Scott Frantz, sent a letter to the CDA Comptroller, Phil Sinta, in which he stated that "upon the departure of Arthur Diedrick, he shall receive compensation for accumulated compensatory time." On July 16, 2004, Mr. Sinta sent a letter to Mr. Frantz in which he reported that based on Mr. Diedrick's current hourly rate of $85.28, he should receive $170,794.52 in compensatory time pay for the 2002.75 extra hours that he had accumulated since 1995.

Based on these facts, you have asked the following questions:

  1. Is the accrual and potential payment of compensatory time to the Chief Executive Officer of the CDA permissible, given that the Authority has no policy regarding the accrual, use or payment of compensatory time?
  2. Was Mr. Diedrick properly appointed to the position of President of the CDA while he was serving as the Chairman of the CDA Board?
  3. If Mr. Diedrick was improperly/illegally holding the office of President while serving as chairman of the CDA board, what impact would that have on any benefits Mr. Diedrick would be entitled to receive? And if it is found to have been improper does the state or the CDA have any recourse with respect to this matter?
  4. If it is determined that Mr. Diedrick was properly holding the office of the President while serving as Chairman, was Mr. Diedrick's continuing to hold the office improper/illegal given that the by-laws require the President to be either the Executive Director or the Chairman of the Board?
  5. Is Mr. Diedrick's dual role as Chairman and President of the CDA a violation of the state ethics code?

Because Mr. Diedrick will be resigning effective August 1, 2004, you have requested that we answer these questions as quickly as possible. The questions that you have posed are complex and will require the collection of additional factual information and further research to answer fully. Because the first question must clearly be resolved prior to Mr. Diedrick's August 1, 2004 resignation, we respond to it now and conclude that legally Mr. Diedrick cannot be paid for his accumulated compensatory time. We will address the remaining questions in a subsequent opinion.

The CDA is a "body politic and corporate, constituting a public instrumentality and political subdivision of the state." Conn. Gen. Stat. § 32-11a(a). Its powers and authority are specifically set forth by statute at Conn. Gen. Stat. §§ 32-11a through 32-23zz.

Conn. Gen. Stat. § 32-11a(c) explicitly states with regard to members of the CDA Board of Directors that "[m]embers shall receive no compensation but shall be reimbursed for necessary expenses incurred in the performance of their duties." Thus, assuming for purposes of this opinion that Mr. Diedrick was legally permitted to hold the position of President as well as his office as Chairman of the Board, clearly if he is entitled to compensation in any form, it can only be for his work as President and cannot be for services rendered as Chairman of the CDA Board.

With regard to hiring employees, the CDA has the authority to:

[E]mploy such assistants, agents and other employees as may be necessary or desirable for its purposes, . . . [and] establish all necessary or appropriate personnel practices and policies, including those relating to hiring, promotion, compensation, retirement and collective bargaining.

Conn. Gen. Stat. § 32-23e(18). Although this provision gives the CDA broad authority to establish personnel practices and policies, such authority must be exercised in compliance with Conn. Gen. Stat. § 32-11a(e), which states that:

The board of directors of the authority shall adopt written procedures, in accordance with the provisions of section 1-121, for: . . . . hiring, dismissing, promoting and compensating employees of the authority, including an affirmative action policy and a requirement of board approval before a position may be created or a vacancy filled. (emphasis added)

If the CDA Board could hire employees pursuant to Conn. Gen. Stat. § 32-23e(18), without complying with the requirements of Conn. Gen. Stat. § 32-11a(e), then the latter provision would be rendered superfluous. "Statutes must be construed, if possible, such that no clause, sentence or word shall be superfluous, void or insignificant." Wiseman v. Armstrong, 269 Conn. 802, 813 (2004). We conclude that the CDA cannot hire or establish compensation for employees, including its President, without adopting written procedures as required by Conn. Gen. Stat. § 32-11a(e).

In order to adopt written procedures in compliance with Conn. Gen. Stat. § 32-11a(e), the CDA must follow the procedural steps set forth in Conn. Gen. Stat. § 1-121. These steps include providing thirty days notice by publication in the Connecticut Law Journal of the intended action, notifying interested individuals when, where and how they may present their views, and adopting the proposed procedure by a two-thirds vote of the full membership of the CDA Board. Id.

It is our understanding from the materials that you have provided to us that the CDA promulgated a document entitled "Connecticut Development Authority, Operating Procedures Pursuant to P.A. 88-266 Section 11(e), An Act Concerning Quasi Public Agencies."1

Section IV of the Operating Procedures, which is entitled "Compensation," provides that:

The Board of Directors shall establish a compensation plan, which shall consist of sufficient salary grades to provide such compensation rates as may be determined to be necessary or desirable for all of the job classifications within the Authority. In addition, the Board of Directors shall adopt a package of fringe benefits as it may deem appropriate from time to time. Such compensation plan and fringe benefits shall be reviewed annually by the Board of Directors as part of its review of the annual budget and plan of operation.

The Executive Director shall be empowered to administer, at the direction of the Board[,] a salary administration plan, and shall have the authority to approve performance evaluations, merit increases, determine bonus levels, and carry out such other duties as appropriate within the overall salary administration plan. The Board of Directors shall review and approve all changes in compensation levels for each position including bonus levels, if any.

Nowhere in this language is any reference to the accumulation of, or payment for, compensatory time. We have received information, which has not been verified, that in 1999 the Finance Committee of the Board may have authorized Mr. Diedrick to be compensated for accumulated compensatory time at the time of his departure from the CDA. Even if this information is correct, it is insufficient to satisfy the procedural requirements of Conn. Gen. Stat. § 1-121.

This conclusion is underscored by the unusual nature of the apparent intent of the CDA to pay Mr. Diedrick for compensatory time. "Compensatory time" is commonly defined as "[t]ime that an employee is allowed to take off from work instead of being paid for overtime already worked." Black's Law Dictionary, p. 305 (8th Ed. 2004) (emphasis added). Thus, compensatory time is generally considered time, not money, that is provided in recognition of time worked above and beyond normal work hours. Compensatory time, in the usual sense of the word, does not result in the employee receiving more than the allotted salary. In the present case, the CDA's interpretation would give Mr. Diedrick substantially more money than his stated salary. Such an unusual and costly benefit would have to be spelled out explicitly in written procedures to satisfy Conn. Gen. Stat. § 1-121, and cannot be considered to fall within the general terms of the "salary administration plan" referenced in the above Operating Procedures.

Also instructive is the policy toward compensatory time in state government. Although we recognize that the CDA is not a state agency and CDA employees are therefore not state employees, Conn. Gen. Stat. § 32-11a(a), the CDA is a quasi public agency and political subdivision of the state, with heightened responsibilities for accountability often exceeding private sector entities. High level state employees typically do not receive compensatory time at all. Indeed, the Department of Administrative Services' ("DAS") Handbook for Appointed Officials, p. 4, explicitly states that "[a]ppointed officials do not receive compensatory time." With regard to managerial employees, the DAS Manager's Guide, p. VIII-1 (March, 2000), states that agency heads may grant compensatory time to managers only if the agency head has given prior authorization, the extra work is significant in terms of hours and duration, and the extra hours worked are recorded on the appropriate time sheet. The Guide emphasizes that "[c]ompensatory time cannot be used as the basis for additional compensation." DAS Manager's Guide, p. VIII-1 (March, 2000)(emphasis added). Thus, the idea that a high level employee would be compensated monetarily for accumulated compensatory time is extremely unusual and contrary to state policy for state employees.

Under these circumstances, in which the CDA intends to grant a high level employee an extremely unusual and costly employee benefit, such a benefit must be explicitly set forth in the CDA's Operating Procedures promulgated pursuant to Conn. Gen. Stat. § 1-121. Even if such procedures were properly promulgated, legal and policy issues would be raised, possibly barring payment, and we express no opinion here as to how these issues would be resolved.

In the absence of any provision governing paid compensatory time in the CDA's Operating Procedures, we conclude that the CDA's proposed payment of approximately $170,794.52 to Mr. Diedrick is unauthorized and should not be paid.

Very truly yours,


RICHARD BLUMENTHAL
ATTORNEY GENERAL


11988 Conn. Pub. Acts No. 88-266 amended Conn. Gen. Stat. § 32-11a(e) to require written procedures adopted pursuant to Conn. Gen. Stat. § 1-121.


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