Attorney General Starts Billing Agencies for Indirect Costs - Southern Maryland Headline News

Attorney General Starts Billing Agencies for Indirect Costs

By Megan Poinski,

(October 05, 2011)—For years, assistant attorneys general have worked in the Comptroller’s Office, paid out of the comptroller’s budget.

Last week, the Comptroller’s Office received an invoice for $22,284 from the Attorney General’s Office for costs related to those attorneys.

“There was no itemized bill, no explanation of the charges,” said Christine Feldmann, deputy director of communications for the office. Staff in the Comptroller’s Office is scrambling to investigate the source and reasoning behind the bill before paying it.

They aren’t the only ones. The legislature passed a new budget policy directing the Office of the Attorney General to recover indirect costs from government departments. It resulted in similar invoices being sent out to most state agencies and universities last week. Combined, the agencies have been billed a total of $1,084,488 – an amount cut from the central budget of the Attorney General’s Office in the fiscal 2012 budget process last spring.

“This is not something this office sought to do or wanted to do,” said David Paulson, spokesman for the Attorney General’s Office. “We were required to do it.”

Indirect costs

As the legislature looked to trim agency budgets, lawmakers noticed that the Attorney General’s Office is responsible for costs that are not directly related to the employees that it pays. The Office of the Attorney General is the hub for much of the legal work in the executive branch, but only directly employs 99 attorneys out of its own budget. There are 430 assistant attorneys general working throughout state government.

As part of the fiscal 2011 budget bills, the Attorney General’s Office was required to figure out just how much it pays out of its own budget to support the more than 300 attorneys who don’t work in its central office. A report on the matter was compiled by the office’s administrative division, and forwarded to the General Assembly last November.

Basically, the report calculated indirect costs of working with the off-site attorneys. Paulson said that these costs, which had been covered in the Attorney General’s budget in past years, are not always obvious charges. For example, they include a share of the costs needed to pay for the administrative employees who deal with them, the legal library that the attorneys use for research, information technology costs, recruiting costs borne by the Attorney General’s Office, and communication costs between employees in the Attorney General’s office and attorneys working elsewhere.

“Without people in the central office, we couldn’t have people working in the outside agencies,” Paulson said.

The report found that a total of $1.9 million in indirect costs came out of the Attorney General’s budget.

Spreading the cost

The report was not forgotten when the legislature went to work on the current fiscal year’s budget in 2011. In its recommendation to the General Assembly’s budget committees, Department of Legislative Services analysts recommended that $1.6 million be cut out of the Attorney General’s budget. More specifically, the money should be taken from the Division of Legal Counsel and Advice, which works with many of the other agencies.

Many executive branch departments that employ assistant attorneys general, like the Department of Health and Mental Hygiene, get special or federal funds for programs they run. If indirect costs are paid out of the special funds, it frees up money from the General Fund, which is used for most state government operations.

However, not all of the indirect costs are out of special funds. And the legislature did not give departments a bump in their budgets to cover the indirect costs for the attorneys.

The final budget bill cut $1.58 million from the Attorney General’s Office, and directed the office to make up $1.08 million in indirect costs.

Bills sent out

The invoices, detailing indirect costs for attorneys for all of fiscal year 2012, were sent out last week, Paulson said.

Some agencies were expecting them, while other agencies were unpleasantly surprised.

“There have been some negative responses, and we have had to explain this to a few of the agencies,” Paulson said.

But some agencies were watching for the coming invoices.

“It was not a surprise to us, and it is a legislative mandate, so it will be paid,” said Jack Cahalan, spokesman for the Maryland Department of Transportation.

MDOT received a total of four invoices.

-- $12,380 for the Maryland Aviation Administration.

-- $49,520 for the State Highway Administration.

-- $9,904 for the Maryland Port Administration.

-- $14,856 for the Transportation Secretary’s Office.

Paulson stressed that it was not the attorney general who wanted to start billing agencies for indirect costs. Ironically, the process to bill agencies for the internal work that the Attorney General’s Office does for them has itself increased the office’s workload.

Whether agencies will receive similar invoices from the Attorney General’s Office in future years is up to the legislature.

“We did what we are required to do under the law, and that has been done,” Paulson said.

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