MARC LARKINS, ETC. VS. GEORGE J. SOLTER, JR.(C-108-15, HUDSON COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2573-15T2
MARC LARKINS, ACTING STATE
COMPTROLLER, STATE OF NEW
JERSEY, OFFICE OF THE STATE
COMPTROLLER,
APPROVED FOR PUBLICATION
Plaintiff-Respondent, June 15, 2017
v. APPELLATE DIVISION
GEORGE J. SOLTER, JR.,
SUPERINTENDENT, NORTH BERGEN
DISTRICT BOARD OF EDUCATION
and NORTH BERGEN DISTRICT
BOARD OF EDUCATION,
Defendants-Appellants.
_________________________________
Argued June 6, 2017 – Decided June 15, 2017
Before Judges Yannotti, Fasciale and Gilson.
On appeal from Superior Court of New Jersey,
Chancery Division, Hudson County, Docket No.
C-108-15.
Michael D. Witt argued the cause for
appellants (Chasan, Leyner & Lamparello,
P.C., attorneys; Mitchell L. Pascual,
Cheyne R. Scott and Mr. Witt, of counsel and
on the briefs).
James A. Carey, Jr., Deputy Attorney
General, argued the cause for respondent
(Christopher S. Porrino, Attorney General,
attorney; Melissa H. Raksa, Assistant
Attorney General, of counsel; Paul Davis,
Deputy Attorney General, on the brief).
The opinion of the court was delivered by
FASCIALE, J.A.D.
Defendants George J. Solter, Jr., Superintendent
(Superintendent), North Bergen District Board of Education
(NBBOE), and the NBBOE, appeal from two December 22, 2015
orders: one granting summary judgment to plaintiff Marc Larkins,
Acting State Comptroller (the State Comptroller), State of New
Jersey, Office of the State Comptroller (the OSC); and the other
denying defendants' cross-motion to compel production of
documents. Defendants also appeal from a February 11, 2016
order denying reconsideration of the orders.
The State Comptroller established objective criteria,
gathered voluminous information, and weighed various factors
before deciding to conduct a performance audit of the NBBOE.
Defendants insisted that the State Comptroller was obligated to
disclose his reasons for the audit before it commenced. As a
result, they conditioned their cooperation on receiving that
information.
In entering the orders, the judge determined the parties'
obligations by interpreting N.J.S.A. 52:15C-1 to -24 (the Act or
Enabling Statute). Based on his review of the Act, the judge
concluded that the State Comptroller had no obligation to
explain his reasons for the audit. Pursuant to N.J.S.A. 52:15C-
2 A-2573-15T2
14(a), the judge compelled defendants to fully assist and
cooperate with the audit.
The legal issue presented on appeal is whether the State
Comptroller was obligated to disclose his reasons for selecting
the NBBOE for a performance audit before commencing the audit.1
We hold that the Enabling Statute does not impose any such
requirement. To hold otherwise would undermine the purpose of
the Act; render meaningless an auditee's unambiguous statutory
obligation to provide full assistance and cooperation with any
audit; and unduly delay the conduct of audits. We therefore
affirm.
I.
We begin by summarizing the State Comptroller's role,
responsibility, and broad administrative powers. Doing so
informs our holding that the State Comptroller is not obligated
to justify, in advance of the audit, his reasons for selecting
the NBBOE for the performance audit. Undertaking this summary
provides further support for our conclusion that imposing such a
condition would substantially undermine the State Comptroller's
independent oversight role in safeguarding efficient and
independent public financial control and accountability
statewide.
1
The performance audit is ongoing.
3 A-2573-15T2
In 2007, the Legislature recognized that the size of
governmental agencies had been steadily growing for decades
because of new and escalating societal needs. N.J.S.A. 52:15C-
1. Although the size of governmental agencies and authorities
had been expanding, the Legislature acknowledged that the
State's ability to manage the governmental accountability
systems had not matched its responsibility to subject
governmental financial activities to public scrutiny. Ibid.
Consequently, the Legislature declared it had a fundamental duty
to the taxpayers to oversee and promote the "professional
conduct of internal audits, [the] assurance on the adequacy of
internal financial controls within agencies of government, [and
the] assess[ment] [of] the adequacy of controls over financial
management, contracting, financial reporting and the delivery of
government programs and activities with due regard to
efficiency, effectiveness and economy." Ibid.
The Legislature determined there existed a compelling need
to ensure "independence and integrity in the financial oversight
of the discharge of its duties and responsibilities [to be]
carried out in a manner and under a structure that safeguards
the fiscal resources with which it has been entrusted[.]" Ibid.
As a result, the Legislature established the OSC, which the
State Comptroller administers, to satisfy these
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responsibilities. Ibid. It also created the OSC to "subject
governmental financial activities to uniform, meaningful, and
systematic public scrutiny[.]" Ibid.
To strengthen the integrity of the State Comptroller's
statutory duties, the Legislature established an independent
governmental framework. Pursuant to N.J.S.A. 52:15C-2, and to
comply with the provisions of article V, section IV, paragraph 1
of the New Jersey Constitution,2 the Legislature declared that
the OSC "shall be allocated in, but not of, the Department of
the Treasury. Notwithstanding this allocation, the [OSC] shall
be independent of any supervision or control by the State
Treasurer, or the department or by any division, board, office,
or other officer thereof." In this independent Executive Agency
2
This provision addresses the organization of various
administrative offices and states:
All executive and administrative offices,
departments, and instrumentalities of the
State government, including the offices of
Secretary of State and Attorney General, and
their respective functions, powers and
duties, shall be allocated by law among and
within not more than twenty principal
departments, in such manner as to group the
same according to major purposes so far as
practicable. Temporary commissions for
special purposes may, however, be
established by law and such commissions need
not be allocated within a principal
department.
[N.J. Const. art. V, § 4, ¶ 1.]
5 A-2573-15T2
capacity, the Legislature required the State Comptroller to
"report directly to the Governor." N.J.S.A. 52:15C-2(b).
The State Comptroller's duties include a wide range of
responsibilities under the Act. Under his direction, the OSC is
responsible for conducting routine, periodic, and random audits
of entities with executive branch authority including "public
institutions of higher education, independent State authorities,
units of local government and boards of education." N.J.S.A.
52:15C-5(a). Likewise, the OSC is responsible for "conducting
assessments of the performance and management of programs of
. . . public institutions of higher education, independent State
authorities, units of local government and boards of education
and the extent to which they are achieving their goals and
objectives." Ibid.
The Legislature consolidated within the OSC coordination
responsibility for internal and external audit functions.
N.J.S.A. 52:15C-7. It therefore authorized the State
Comptroller to establish an independent "full-time program of
audit and performance review[.]" N.J.S.A. 52:15C-7(a). Such a
program would be in addition to any audit or review conducted by
entities other than the OSC. The Legislature also designed the
consolidation of these functions to "provide increased
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accountability, integrity, and oversight of . . . all . . .
units of local government and boards of education[.]" Ibid.
To fulfill his statutory obligations under the Act, the
Legislature directed the State Comptroller to establish various
guidelines. The Legislature directed the State Comptroller to
adopt rules and regulations in accordance with the
Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15,
"as shall be necessary to implement the provisions of this
[A]ct." N.J.S.A. 52:15C-19; see also N.J.S.A. 52:15C-8(a)
(stating in part that the State Comptroller "shall, pursuant to
the provisions of the [APA], adopt rules and regulations
necessary to effectuate the purposes of this [A]ct").
The State Comptroller enjoys broad powers under the Act.
Pursuant to N.J.S.A. 52:15C-8(a), the State Comptroller "shall
have all the powers necessary" to carry out his statutory
duties, functions, and responsibilities. The State Comptroller
has authority to conduct financial audits pursuant to N.J.S.A.
52:15C-8(c)(2), and performance audits pursuant to N.J.S.A.
52:15C-8(c)(3).
In accordance with N.J.S.A. 52:15C-8(c)(3), and pertinent
to this appeal, the State Comptroller is required to establish
objective criteria for analyzing whether to undertake a
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performance audit. In deciding whether to conduct a performance
audit, the State Comptroller must use that criteria and
weigh relevant risk factors, including, but
not limited to: (a) the size of the entity's
budget, (b) the entity's past performance,
(c) the frequency, scope, and quality of any
audits or reviews that have been performed
regarding the entity's financial condition
or performance, (d) assessments or
evaluations of the entity's management,
performance or financial condition such as
those undertaken as part of the New Jersey
Quality Single Accountability Continuum for
school districts, and (e) other credible
information which suggests the necessity of
a review.
[N.J.S.A. 52:15C-8(c)(3).]
In this section, reference to "entity" means "any unit in the
Executive branch of State government, including all entities
exercising executive branch authority, public institutions of
higher education, independent State authorities, units of local
government and boards of education or their vendors." N.J.S.A.
52:15C-8(c)(4).
II.
On March 31, 2015, a Director of the Audit Division in the
OSC (the Audit Director) wrote the Superintendent and explained
that the OSC had been analyzing whether to review the operations
of certain school districts statewide. In his letter, the Audit
Director explained the OSC had focused on those school districts
8 A-2573-15T2
receiving fifty percent or more of their fiscal year 2013
budgets from State aid. The NBBOE fell into that category.
To determine whether to conduct the performance audit of
the NBBOE, the Audit Director requested the NBBOE produce the
following documentation for the period between July 2012 and
March 2015:
1. Organizational Chart (including names of
key personnel).
2. Written policies and procedures governing
expenditures (including payroll).
3. Employment contracts for all bargaining
units.
4. Board meeting minutes.
5. List, including vendor name, description
of services and total amount paid, of all
contracts exceeding $500,000.
6. Download of financial and payroll data.
The NBBOE produced a majority but not all of the requested
information.
On May 21, 2015, the Audit Director notified the
Superintendent that it intended to conduct the performance audit
of "selected fiscal and operating practices of the [NBBOE]." A
Deputy State Comptroller (the Deputy Comptroller) informed the
NBBOE that the OSC would conduct the audit in accordance with
applicable governmental auditing guidelines. The OSC then
9 A-2573-15T2
scheduled a June 10, 2015 opening conference to address its
agenda.
In anticipation of that conference, the OSC provided the
Superintendent with a pamphlet, which contained a full
description of the OSC's mission, authority, and audit process.
The pamphlet listed such things as the dates the audit would
cover; the OSC's intention to examine the NBBOE's fiscal and
operating practices; and its plan to analyze the NBBOE's related
accounting information system and controls. The pamphlet
identified defendants' outstanding document responses, and the
OSC's request for additional documents:
Outstanding [document] Request:
a. Financial Data – Download (Excel format
preferred) of check register, purchase order
journal and general ledger identifying
specific transaction information including
but not limited to vendor/payee name and
number; purchase order/check date, number,
amount; account number charged, etc. for
Fiscal Years 2013-2015. Provide file layout
explaining data headings[;]
b. Year-end payroll report for Fiscal Years
2013-2015 (PDF or paper copy)[;]
c. Policies 6422-6832 noted on table of
contents or written confirmation that they
are not used by the District[.]
Additional [document] Request:
d. Committee Report on the Administrative
Reorganization of the North Bergen Public
Schools[;]
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e. Tuition Contract Agreements with
Guttenberg Board of Education for Fiscal
Years 2013-2015[;]
f. All Job Description Manuals for Fiscal
Years 2013-2015[;]
g. Copy of Collective Bargaining Agreement
covering Fiscal Year 2013 between North
Bergen Council of Administrators and
Supervisors and [the NBBOE;]
h. Copy of Collective Bargaining Agreement
covering Fiscal Year 2013 between [the
NBBOE] and North Bergen Education
Association for Custodial and Maintenance
Employees, Housekeeping, Audiovisual
Technicians, Security Officers, Computer
Technicians, Attendance Officers, and Bus
Drivers[;]
i. All Executive Employment
Agreements/Contracts for Fiscal Years 2013-
2015 (not covered under a Collective
Bargaining Agreement)[;]
j. Copy of contract with the Alamo Insurance
Group for the administration of prescription
services to Benecard Services, Inc[;]
k. Meeting Minutes for January 2013 (we only
received page [one])[.]
In addition to providing its agenda, the OSC submitted to the
Superintendent an Audit Engagement Information Technology
Questionnaire.
In advance of the opening conference, the NBBOE's counsel
communicated with the Deputy Comptroller as to why the State
Comptroller had selected the NBBOE for the audit. He demanded
11 A-2573-15T2
that she explain the State Comptroller's reasons for picking the
NBBOE out of approximately seventy school districts, which
purportedly fell within the OSC's target group. According to
the NBBOE's counsel, the Deputy Comptroller explained to him
that the OSC's goal was to sample a school district from an area
in North Jersey and a school district from an area in South
Jersey.
Defendants then made multiple requests for documents
pursuant to Open Public Records Act (OPRA), N.J.S.A. 47:1A-1 to
-13. The NBBOE's counsel certified that he sought "information
on the selection process [for the performance audit] and the
identity of other districts . . . contacted by the OSC." In its
OPRA responses, the OSC withheld or redacted documents pursuant
to OPRA's advisory, consultative, deliberative process, and
investigation in progress exemptions.3
On June 9, 2015, the NBBOE's counsel wrote the OSC and
stated "the [NBBOE] believes that it is entitled to know how it
was selected for an audit and what, if any, weaknesses,
3
Under a different docket number, the NBBOE challenged the
adequacy of plaintiff's OPRA responses. On March 15, 2016, a
Law Division judge entered an order rejecting the NBBOE's
challenge, concluding plaintiff properly redacted and withheld
certain documents under OPRA and the deliberative process
privilege. The Law Division judge dismissed that matter with
prejudice. Defendants did not appeal from that order of
dismissal.
12 A-2573-15T2
inadequacies or failures [existed] in the entities['] financial
controls." He stated that the State Comptroller's power to
conduct audits "appears to be limited" by N.J.S.A. 52:15C-
8(c)(2), which unlike here, pertains to financial audits, not
performance audits. He asserted that pursuant to N.J.S.A.
18A:23-1 and N.J.S.A. 18A:7A-10, the NBBOE "(1) ha[d] certified
financial audits performed on an annual basis[,] and (2) [was]
subject to review by the State of New Jersey Department of
Education [(NJDOE)] under the New Jersey Quality Single
Accountability Continuum [(NJQSAC)]."
On June 10, 2015, the NBBOE's counsel attended the
scheduled opening conference, but he maintained that the NBBOE
was entitled to know the State Comptroller's reasons for the
audit before it commenced. Later that day, the NBBOE's counsel
wrote to the OSC and stated that "[t]he [NBBOE] has essentially
asked two simple questions of the OSC: (1) how was the [NBBOE]
selected for this audit; and (2) has the OSC met the
requirements necessary under its own enabling legislation to
authorize the audit that it seeks to perform." The NBBOE
counsel contended that the State Comptroller's authority to
proceed with the audit is statutorily "triggered by findings of
deficiency as to the [NBBOE] certified audit reports." After
the NBBOE counsel refused to allow the performance audit to
13 A-2573-15T2
proceed as planned, the State Comptroller directed the OSC audit
team to leave the opening conference.
On June 11, 2015, the Deputy Comptroller issued a two-page
informal letter to the NBBOE's counsel. She explained that the
NBBOE was not entitled to the information requested by its
counsel. She stated that the OSC had "absolute, unfettered
authority" to conduct a performance audit of the NBBOE pursuant
to the Act. She further explained that the Enabling Statute did
not impose an obligation for the State Comptroller to disclose
an "identification of weaknesses" to the NBBOE as a condition to
conducting the performance audit. Defendants did not
administratively appeal to the State Comptroller from the June
11 letter.
In her June 11 letter, the Deputy Comptroller asked counsel
whether the NBBOE intended to submit to the performance audit
without conditions "as required by law." The NBBOE reiterated
its position that it was entitled to the information requested,
especially because the NBBOE had recently undergone audits by
the NJQSAC, and had received a purportedly favorable
Comprehensive Annual Financial Report (CAFR) from an independent
consultant. The NBBOE counsel certified that the NBBOE would
"not proceed[] with the opening conference unless and until the
14 A-2573-15T2
OSC ha[d] complied with [his interpretation of] the [Enabling
Statute]."
III.
In July 2015, plaintiff filed an order to show cause (OTSC)
and this verified complaint. In the verified complaint,
plaintiff sought a declaratory judgment that it had "unfettered
authority to conduct a performance audit [of the NBBOE] pursuant
to N.J.S.A. 52:15-1, -5, -7, and -8(c)(3), without having to
demonstrate . . . that it has satisfied any preconditions before
commencing such performance audit[.]" Plaintiff sought an order
compelling defendants' full cooperation with the performance
audit.
In its proposed OTSC, plaintiff identified Rule 4:67-1(b)
(allowing summary applications under certain circumstances where
the matter may be completely disposed of in a summary manner).
The proposed OTSC sought various declarations interpreting
N.J.S.A. 52:15-1, -5, -7, and -8(c)(3). Plaintiff withdrew the
OTSC,4 defendants filed their answer to the verified complaint,
and the matter proceeded to pre-trial discovery.
In pre-trial discovery, defendants demanded production of
all documents relating to the audit; propounded interrogatories
4
The parties agree that plaintiff withdrew the OTSC for lack
of proper service.
15 A-2573-15T2
seeking a detailed description of "the protocol, procedure,
and/or process utilized by [plaintiff] in selecting the NBBOE
for the audit"; and served deposition notices for the State
Comptroller, Deputy Comptroller, and Supervising Audit Manager
of the OSC.
Plaintiff explained that it had produced the demanded
documents in response to defendants' numerous OPRA requests, and
that the deliberative process privilege protected the remaining
items sought. At this point, plaintiff categorized this lawsuit
as an "enforcement action seeking an order compelling
[d]efendants' [full] cooperation with [plaintiff's] performance
audit as mandated by [the Enabling Statute]." Thereafter,
plaintiff filed its motion for summary judgment, and defendants
cross-moved to compel production of discovery.
At oral argument before the judge, a Deputy Attorney
General (DAG) stated that plaintiff sought summary judgment
pursuant to Rule 4:67-6 (governing the process for enforcing
agency orders). The DAG stated to the judge that "the State is
. . . moving under [Rule 4:67-6(c)(2)] to enforce the State's
[']order['] . . . to undergo and cooperate with an audit." The
DAG attempted to enforce the June 11, 2015 letter, and requested
an order compelling defendants to cooperate unconditionally with
the audit.
16 A-2573-15T2
The judge granted plaintiff's motion for summary judgment
without relying on Rule 4:67-6, denied the NBBOE's cross-motion
for production of discovery, and rendered a written decision.
As to the cross-motion, the judge determined that the
deliberative process privilege precluded production of the
requested discovery. Then the judge concluded the NBBOE's
conditional cooperation contravened the Act's statutory scheme.
He found that the State Comptroller established and weighed
objective criteria, which justified the performance audit
pursuant to N.J.S.A. 52:15C-8(c)(3). Relying on his
interpretation of the Act, the judge rejected the NBBOE's
attempt to impose preconditions to its statutory obligation to
cooperate with the State Comptroller's audit.
The NBBOE moved for reconsideration contending primarily
that the State Comptroller had failed to comply with the Act by
providing his reasons for selecting the NBBOE for the audit.
Plaintiff repeated its position that no such statutory
requirement existed, and cross-moved to enforce litigant's
rights pursuant to Rule 1:10-3. As to the reconsideration
motion, the judge stated that the
Enabling Statute "simply establishes
objective criteria and other factors which
[the State Comptroller] must consider during
its selection process." I further held that
the [Enabling] Statute does not require [the
State Comptroller] "to make any disclosure
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or provide some rationale to the auditee
before conducting its audit, or to provide
some rationale that i[t] has complied with
its statutory obligations." . . .
Defendants argue once again, without
offering any support for their argument,
that [the State Comptroller] must satisfy
preconditions before [d]efendants are
required to comply with the audit. Again, I
reject this argument.
The judge denied reconsideration, and enforced the court's
December 22, 2015 order.
IV.
On appeal, the NBBOE argues generally that plaintiff failed
to comply with the Enabling Statute; genuine issues of material
fact preclude summary judgment; the deliberative process
doctrine is inapplicable; and the court failed to conduct an in
camera review of records.
A.
Before reaching the merits of defendants' contentions, we
briefly address the procedural posture of the appeal. At no
point did the NBBOE administratively appeal to the State
Comptroller from the informal determination contained in the
June 11 letter of the Deputy Comptroller. Thus, the State
Comptroller never rendered a final agency determination from
which the NBBOE could appeal to us. Instead, as evidenced in
the OSC's verified complaint and OTSC, plaintiff sought a
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summary declaration to enforce its rights under the Act pursuant
to Rule 4:67-1(b).
At oral argument before the judge, plaintiff erroneously
relied in part on Rule 4:67-6, which vests in the trial court
jurisdiction for agency enforcement proceedings and
simultaneously preserves our exclusive jurisdiction to review
the merits of agency determinations pursuant to Rule 2:2-
3(a)(2). Rule 4:67-6 generally applies to actions brought by an
agency to enforce "an order already entered by it." Pressler &
Verniero, Current N.J. Court Rules, comment 2 on R. 4:67-6(a)(1)
(2017). Here, there is no such order from the State Comptroller
to enforce.
Under certain circumstances, which do not exist here, a
trial court may simultaneously address whether to enforce an
agency order and consider an objection that the order is
invalid. For example, Rule 4:67-6(c)(2) states in part that
"[i]f enforcement of an order is sought pursuant to [Rule] 1:9-6
and no proceeding is pending in the Appellate Division to review
or seeking to review its validity, [then] such review shall be
had in the trial court by way of defense to enforcement." Rule
4:67-6(c)(2), however, pertains to enforcement of an order
sought pursuant to Rule 1:9-6. Plaintiff did not seek
19 A-2573-15T2
enforcement of an order pursuant to Rule 1:9-6. As a result,
plaintiff's reliance on Rule 4:67-6(c)(2) is misplaced.
Nevertheless, plaintiff correctly filed its verified
complaint and OTSC seeking to enforce defendant's statutory
obligation to cooperate with the State Comptroller's audit under
the Act pursuant to Rule 4:67-1(b). The judge properly
adjudicated the controversy and entered declaratory relief. As
a result, we consider the matter on the merits.
B.
When reviewing an order granting summary judgment, we apply
"the same standard governing the trial court." Oyola v. Liu,
431 N.J. Super. 493, 497 (App. Div.), certif. denied, 216 N.J.
86 (2013). We owe no deference to the motion judge's
conclusions on issues of law. Manalapan Realty, L.P. v. Twp.
Comm. of Manalapan, 140 N.J. 366, 378 (1995). Applying these
standards, we conclude there was no error.
It is undisputed that defendants refused to proceed until
the State Comptroller explained why he selected the NBBOE for
the audit. On June 11, 2015, the NBBOE's counsel stated in
writing that the NBBOE "did not proceed on June 10, 2015 because
[in his view] the OSC has refused to comply with the
requirements of N.J.S.A. 52:15C-8(c)." On June 17, 2015, the
NBBOE's counsel wrote the Deputy Comptroller repeating his
20 A-2573-15T2
position that there existed "conditions precedent to the
exercise of the performance audit[.]" He attached a legal
analysis to his letter, which further concluded that
"fundamental fairness and the mutual respect owed by
governmental entities" required the State Comptroller to give
his rationale for the audit request. As a result, we turn our
attention to the issue of whether the State Comptroller is
required to disclose his reasons for seeking a performance
audit. We review that legal issue de novo.
Well-settled legal principles govern our interpretation of
the Act. "The Legislature's intent is the paramount goal when
interpreting a statute and, generally, the best indicator of
that intent is the statutory language." DiProspero v. Penn, 183
N.J. 477, 492 (2005). In interpreting a statute, we give words
"'their ordinary meaning and significance,' recognizing that
generally the statutory language is 'the best indicator of [the
Legislature's] intent.'" Tumpson v. Farina, 218 N.J. 450, 467
(2014) (alteration in original) (quoting DiProspero, supra, 183
N.J. at 492). We read each statutory provision "in relation to
other constituent parts so that a sensible meaning may be given
to the whole of the legislative scheme." Wilson ex rel. Manzano
v. City of Jersey City, 209 N.J. 558, 572 (2012). "[I]f there
is ambiguity in the statutory language that leads to more than
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one plausible interpretation, we may turn to extrinsic evidence,
'including legislative history, committee reports, and
contemporaneous construction.'" DiProspero, supra, 183 N.J. at
492-93 (quoting Cherry Hill Manor Assocs. v. Faugno, 182 N.J.
64, 75 (2004)).
The plain text of the Act demonstrates that unconditional
cooperation by an auditee is essential to the State Comptroller
fulfilling his statutory duties and responsibilities.
Unconditional cooperation is also fundamental to achieving the
goal of "subject[ing] governmental financial activities to
uniform, meaningful, and systematic public scrutiny[.]"
N.J.S.A. 52:15C-1. The Legislature unambiguously declared in
N.J.S.A. 52:15C-14(a) that
[a]ll units in the Executive branch of State
government, including entities exercising
Executive branch authority, independent
State authorities, public institutions of
higher education, units of local government
and boards of education and their employees
shall provide full assistance and
cooperation with any audit, performance
review or contract review by the State
Comptroller.
[(Emphasis added).]
An auditee is therefore unambiguously required to fully
cooperate and assist the State Comptroller with any audit. Such
cooperation and assistance is mandatory.
22 A-2573-15T2
An auditee may not condition its cooperation and assistance
on the State Comptroller first explaining why he selected the
auditee for the performance audit. Such a contingency would
compromise the State Comptroller's role of providing independent
financial oversight. And it would potentially delay the audit,
like here, by requiring the State Comptroller to justify his
reasons for the performance audit before it commenced; respond
to numerous OPRA requests; litigate a separate OPRA lawsuit
against the OSC; review extensive document demands and multiple
interrogatories; and object to deposition notices of several OSC
individuals, including the State Comptroller himself. Nothing
in the Act indicates that the Legislature envisioned such a
protracted process when it created the position of State
Comptroller and the OSC.
Rather, the State Comptroller employed the procedure
outlined in the Act for deciding whether to conduct the
performance audit. Pursuant to N.J.S.A. 52:15C-8(c)(3), he
established and weighed various factors before selecting the
NBBOE for the performance audit. Among other things, the State
Comptroller analyzed organizational charts, written policies and
procedures governing expenditures, specific employment contracts
for bargaining units, board meeting minutes, vendor names and
services for contracts exceeding $500,000, payroll data,
23 A-2573-15T2
committee reports, job description manuals, and other executive
employment agreements. The judge was satisfied, and so are we,
that the State Comptroller adhered to the procedure listed in
N.J.S.A. 52:15C-8(c)(3).
The Legislature could have required the State Comptroller
disclose to a prospective auditee the risk factors that it
considered when evaluating whether to conduct a performance
review. It could have tied an auditee's cooperation and
assistance to disclosure by the State Comptroller of his reasons
for selecting that auditee before commencing the audit. But the
Legislature did not impose any such requirements. And for good
reason: requiring conditional cooperation would telecast the
State Comptroller's concerns to the auditee; hinder the State
Comptroller's fundamental role of providing independent
oversight and ensuring public financial control and
accountability statewide; and would have a substantial adverse
impact upon the goal of transparently managing the State's
increased governmental systems.
Imposing such a requirement would also require us to re-
write the Enabling Statute, a function that is not ours to
perform. DiProspero, supra, 183 N.J. at 492. Requiring the
State Comptroller to provide his reasons for conducting a
performance audit before commencing the audit would therefore
24 A-2573-15T2
fly in the face of the Act's central purpose and statutory
scheme.
C.
We reject defendants' contention that the judge erred by
denying their cross-motion for production of discovery.
Defendants assert that the judge misapplied the deliberative
process privilege. Defendants argue that the judge should have
conducted an in camera review of documents.
Defendants demanded documents revealing plaintiff's
"protocol, procedure, and/or process" employed by the State
Comptroller to select the NBBOE for the audit. As we have
previously stated, the Legislature established a statutory
scheme intending to promote fiscal responsibility and
accountability at all levels of government. Requiring the OSC
to reveal its internal reasons for selecting an auditee would
significantly undermine the State Comptroller's independent
oversight role in safeguarding efficient and independent public
financial control and accountability statewide. For these
reasons alone, defendants are not entitled to this type of
discovery.
As to the judge's application of the deliberative process
privilege, we note the following longstanding principles. The
doctrine existed before OPRA was enacted in 2001, see In re
25 A-2573-15T2
Liquidation of Integrity Ins. Co., 165 N.J. 75, 83-85 (2000),
and was since codified as an OPRA exemption in N.J.S.A. 47:1A-
1.1. "Although OPRA rather broadly defines what is a
'government record,' it expressly provides that the term 'shall
not include inter-agency or intra-agency advisory, consultative
or deliberative material.'" Ciesla v. N.J. Dep't of Health &
Sr. Servs., 429 N.J. Super. 127, 137 (App. Div. 2012) (quoting
N.J.S.A. 47:1A-1.1). "This exemption has been construed to
encompass the deliberative process privilege, which has its
roots in the common law." Ibid. (citing Educ. Law Ctr. v. N.J.
Dep't of Educ., 198 N.J. 274, 284 (2009)).
Under the doctrine, the government may withhold documents
that include "advisory opinions, recommendations, and
deliberations comprising part of a process by which [its]
decisions and policies are formulated." Id. at 137 (alteration
in original) (quoting Integrity, supra, 165 N.J. at 83). For
the privilege to apply, the document needs to meet two
requirements. Id. at 138. First, an agency must prove that a
document is "'pre-decisional,' i.e., 'generated before the
adoption of an agency's policy or decision.'" Ibid. (quoting
Integrity, supra, 165 N.J. at 84). Second, the document must be
deliberative, meaning it "contain[s] opinions, recommendations,
or advice about agency policies." Ibid. (alteration in
26 A-2573-15T2
original) (quoting Integrity, supra, 165 N.J. at 84-85).
Deliberative material may include material involved in the
exercise of "policy-oriented judgment," Educ. Law Ctr., supra,
198 N.J. at 295, or "policy-infused decision[s,]" Ciesla,
supra, 429 N.J. Super. at 142. "A court must assess such fact-
based documents against the backdrop of an agency's deliberative
efforts in order to determine a document's nexus to that
process, and its capacity to expose the agency's deliberative
thought-processes." Educ. Law Ctr., supra, 198 N.J. at 299-300.
The documents in question undoubtedly expose the OSC's pre-
decisional opinions, recommendations, or advice about its
policies and thought-processes.
Here, plaintiff withheld an internal OSC audit proposal,
planning memorandum, and risk/priority evaluation. The audit
proposal memorialized the OSC's preliminary analysis, applied
certain objective criteria established by the State Comptroller,
and contained the OSC's recommendations. The planning
memorandum revealed the OSC's strategic pre-decisional risk
analysis, and provided the State Comptroller with the OSC's
risk/priority evaluation.
These documents implicitly reflected the OSC's internal
deliberative pre-decisional process and policy recommendations
to the State Comptroller as to whether to audit certain school
27 A-2573-15T2
districts. The documents demonstrated, from a pre-decisional
policy perspective, not only what school districts to audit, but
also what conduct to audit. And the documents showed the OSC's
pre-decisional policy determinations as to how to perform the
audits. In addition, the documents included consideration of
additional objective criteria, beyond those mentioned in
N.J.S.A. 52:15C-8(c)(3).
Such internal policy communication within the OSC is vital
to the State Comptroller's ability to safeguard efficient and
independent public financial control and accountability
statewide. And such OSC communication enables the State
Comptroller to perform his independent statutory oversight
functions designed to fundamentally strengthen governmental
fiscal responsibility and accountability. Furthermore,
production of such information would arm auditees with the
ability to hinder performance audits.
We conclude that defendants' remaining argument, that the
judge abused his discretion by failing to perform an in camera
inspection of the documents, is without sufficient merit to
warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
We add the following brief comments.
The record, which contains numerous certifications, shows
the judge could readily determine that the documents were not
28 A-2573-15T2
subject to disclosure. Like in cases involving OPRA, courts
must balance the need for confidentiality against the public
interest for information before determining whether to conduct
an in camera review of documents. See Loigman v. Kimmelman, 102
N.J. 98, 112-13 (1986). Documents exempt from access are not
subject to in camera review. Paff v. N.J. Dep't of Labor, Bd.
of Review, 379 N.J. Super. 346, 355 (App. Div. 2005). Here, the
trial court found correctly that "public interest favored [the
OSC]," and there was no need for an in camera review. As such,
they are exempt from disclosure.
Affirmed.
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