Does Virginia's State Inspector General have to take over every function from predecessor IG offices, and does its reach include non-executive branch state bodies?

Plain-English summary

The State Inspector General asked two questions about the scope of the Office of the State Inspector General (OSIG). First, did OSIG have to assume all related powers, duties, and resources from predecessor inspector general offices? Second, did OSIG have jurisdiction beyond executive branch agencies?

The AG said OSIG was not required to absorb everything from predecessor IG offices. OSIG was created during the 2011 General Assembly Session and modified in 2013. The 2011 enabling legislation contained two clauses that controlled the answer. The fifth enactment clause directed the Governor to develop a transfer plan that would consider "where transfer of the internal audit program to the Office is necessary or when a dual reporting structure is most practicable." That language allowed certain functions to stay with predecessor IG offices under dual reporting. The third enactment clause transferred predecessor rights and property "to the extent that this act transfers powers and duties." That phrase signaled that OSIG didn't necessarily get the entirety of each predecessor's portfolio.

So the General Assembly contemplated some functions remaining with pre-existing offices at affected agencies (Behavioral Health and Developmental Services, Corrections, Juvenile Justice, Transportation, Department of the State Internal Auditor). OSIG's intake was bounded by what the legislation actually transferred.

On jurisdictional scope, § 2.2-309 sets out OSIG's powers and duties. The AG read three jurisdictional buckets:

1. State agencies: under § 2.2-307, "any agency, institution, board, bureau, commission, council, or instrumentality of state government in the executive branch listed in the appropriation act." OSIG investigates fraud, waste, abuse, or corruption at these agencies; conducts performance reviews; coordinates and requires standards for internal audit programs; assists internal audit programs.

2. Non-state agencies: under § 2.2-307, "any public or private foundation, authority, institute, museum, corporation, or similar organization that is (i) not a unit of state government or a political subdivision and (ii) wholly or principally supported by state funds." The definition excludes entities that receive state funds through subgrants, grant-in-aid programs, competitive grants/contracts, or real-property leases. OSIG has largely identical investigative jurisdiction over these as over state agencies, except it cannot conduct performance reviews of non-state agencies.

3. Public institutions of higher education: under § 2.2-309(B), only for complaints alleging fraud, waste, abuse, or corruption that concern the president of the institution or its internal audit department.

Notably absent: units of state government outside the executive branch that are neither state nor non-state agencies. OSIG does not reach the legislative or judicial branches, nor independent constitutional officers as such.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What if a state agency had its own IG before OSIG was created?
Some functions could remain with the agency's pre-existing IG office under a dual reporting structure. The 2011 legislation explicitly contemplated that option. OSIG would coordinate and require standards but didn't have to absorb the entire pre-existing function.

Can OSIG investigate a private nonprofit that gets state funds?
Only if it qualifies as a "non-state agency" under § 2.2-307: wholly or principally supported by state funds AND not falling into one of the carve-outs (subgrantee, grant-in-aid, competitive grants/contracts, real-property lease). A nonprofit that's mostly state funded through a non-carve-out mechanism is in OSIG's reach.

Why is higher education jurisdiction so narrow?
Public universities have their own internal audit departments and independent governance. The General Assembly gave OSIG only a narrow lane: complaints about the institution's president or its internal audit department. Other complaints get handled internally by the university or its board.

Can OSIG investigate the legislature or the judiciary?
No. The definition of "state agency" is limited to the executive branch listed in the appropriation act. Legislative and judicial branch units aren't within that definition.

What did the 2013 changes do?
The 2013 legislation reorganized OSIG and clarified that OSIG investigators had law enforcement powers. The opinion was issued mid-year, after the 2013 changes, and read the 2011 and 2013 legislation together as a single body of law.

Background and statutory framework

OSIG was created during the 2011 General Assembly Session, and the 2013 General Assembly Session made changes to reorganize OSIG and clarify that its investigators had law enforcement powers. The AG read the 2011 and 2013 legislation together as if originally enacted together.

The fifth enactment clause of the 2011 legislation directed the Governor to plan for "coordination and oversight of the internal audit programs to the Office of the State Inspector General" and to consider whether transfer or dual reporting structure was most practicable. The third enactment clause designated OSIG as successor to the Inspector General offices of Behavioral Health and Developmental Services, Corrections, Juvenile Justice, Transportation, and the Department of the State Internal Auditor, "to the extent that this act transfers powers and duties."

Sections 2.2-309.1 through 2.2-309.4 provide that OSIG takes over certain audit functions of a smaller subset of state agencies that have traditionally had their own inspector general.

Section 2.2-307 defines "state agency" (executive branch, listed in the appropriation act) and "nonstate agency" (specific public/private organizations wholly or principally supported by state funds, with explicit carve-outs).

Section 2.2-309 lays out OSIG's powers and duties: investigation of fraud, waste, abuse, or corruption at state and non-state agencies; performance reviews of state agencies; coordination and standards for internal audit programs; assistance to internal audit programs; investigation of complaints concerning higher education presidents or audit departments.

Citations

• Va. Code § 2.2-505 (Attorney General opinions)
• Va. Code § 2.2-307 (definitions of state and non-state agencies)
• Va. Code § 2.2-309 (OSIG powers and duties)
• Va. Code §§ 2.2-309.1 through 2.2-309.4 (agency-specific oversight)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2013/12-076_Morehart.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

July 19, 2013

The Honorable Michael F.A. Morehart
State Inspector General
1111 East Broad Street
Richmond, Virginia 23219

Dear Inspector General Morehart:
I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented
You ask whether the Office of the State Inspector General ("OSIG") must assume all related powers, duties, and resources from certain predecessor entities and whether OSIG has jurisdiction beyond agencies within the executive branch of state government.

Response
It is my opinion that OSIG is not required to assume all duties, powers, and resources from the predecessor entities. It is further my opinion that the jurisdiction of OSIG is limited to executive branch agencies; non-governmental entities that are wholly or principally supported by state funds not otherwise excepted by the definition of "nonstate agency;" and public institutions of higher education to the extent that there are allegations of fraud, waste, abuse, or corruption concerning either the president of the institution or such institution's internal audit department.

Applicable Law and Discussion
The statutory provisions establishing and governing OSIG grant it broad authority to investigate many state agencies. Sections 2.2-309.1 through 2.2-309.4 provide that OSIG will take over certain audit functions of a smaller subset of state agencies that have traditionally had their own inspector general. Specifically, you inquire whether these provisions require OSIG to assume all of the related powers, duties, and resources from the inspector general offices of these agencies.

The OSIG was established during the 2011 General Assembly Session. In 2013 changes were made to that enabling legislation to reorganize the OSIG and to clarify that OSIG investigators had law enforcement powers. It is important to look at the language of the 2011 legislation and 2013 legislation together and interpret them as if originally enacted together.

We begin by looking at the fifth enactment clause of the 2011 legislation, which requires the Governor and other stakeholders to develop a plan to transfer the internal audit programs from affected agencies:

[t]he Governor, on or before December 31, 2011, shall, in consultation with impacted stakeholders, complete a plan for the coordination and oversight of the internal audit programs to the Office of the State Inspector General. This plan shall consider where transfer of the internal audit program to the Office is necessary or when a dual reporting structure is most practicable.

The option of either transferring the internal audit program or maintaining a dual reporting structure implicitly allows for certain functions to remain with pre-existing internal audit programs residing at the specified state agencies, provided that OSIG retains some authority over such programs.

Moreover, the third enactment clause provides for the transfer of the properties and rights from the consolidated inspector general offices to OSIG:

[t]he Office of the State Inspector General created by this act shall be deemed the successor in interest to the (i) Office of the Inspector General for Behavioral Health and Developmental Services, (ii) Inspector General for the Department of Corrections, (iii) Inspector General of the Department of Juvenile Justice, (iv) Inspector General of the Department of Transportation, and (v) Department of the State Internal Auditor, to the extent that this act transfers powers and duties. All rights, title, and interest in and to any real or tangible personal property vested in the Inspector General for Behavioral Health and Developmental Services, the Inspector General for the Department of Corrections, the Inspector General of the Department of Juvenile Justice, the Inspector General of the Department of Transportation, and the Department of the State Internal Auditor to the extent that this act transfers powers and duties as of July 1, 2012, shall be transferred to and taken as standing in the name of the Office of the State Inspector General created by this act.

By including the phrase "to the extent that this act transfers powers and duties," the General Assembly indicated that it did not intend for OSIG necessarily to assume the entirety of the consolidated inspector general offices located within other agencies.

There is nothing in the 2013 legislation to suggest that the General Assembly expressed some other intent than that set forth in these enactment clauses. I therefore conclude that OSIG is not required to assume all duties, powers, and resources from the predecessor entities.

Your next question refers to the scope of OSIG's jurisdiction over "nonstate" agencies and other agencies outside of the executive branch of government. Section 2.2-307 of the Code of Virginia defines "state agency" as "any agency, institution, board, bureau, commission, council, or instrumentality of state government in the executive branch listed in the appropriation act." A "nonstate agency" is defined as

[a]ny public or private foundation, authority, institute, museum, corporation, or similar organization that is (i) not a unit of state government or a political subdivision of the Commonwealth as established by general law or special act and (ii) wholly or principally supported by state funds. "Nonstate agency" shall not include any such entity that receives state funds (a) as a sub grantee of a state agency, (b) through a state grant-in-aid program authorized by law, (c) as a result of an award of a competitive grant or a public contract for the procurement of goods, services, or construction, or (d) pursuant to a lease of real property as described in subdivision 5 of § 2.2-1149.

Section 2.2-309 sets forth the powers and duties of the State Inspector General and includes the following:

A. The State Inspector General shall have power and duty to . . .

4. Investigate the management and operations of state agencies and nonstate agencies to determine whether acts of fraud, waste, abuse, or corruption have been committed . . . ;
5. Conduct performance reviews of state agencies . . . ;
6. Coordinate and require standards for those internal audit programs in existence as of July 1, 2012, and for other internal audit programs in state agencies and nonstate agencies . . . ;
7. Assist agency internal auditing programs . . . ;

B. If the State Inspector General receives a complaint from whatever source that alleges fraud, waste, abuse, or corruption by a public institution of higher education ... [and] the complaint concerns the president of the institution or its internal audit department ... the investigation shall be conducted by the State Inspector General . . . .

These provisions grant OSIG largely identical jurisdiction over state and nonstate agencies. OSIG's powers and duties appear limited to (1) state government executive branch agencies; (2) non-governmental entities that are wholly or principally supported by state funds not otherwise excepted by the definition of nonstate agency; and (3) allegations of fraud, waste, abuse, or corruption where the complaint concerns the president of a public institution of higher education or its internal audit department. Notably, the jurisdiction of OSIG does not extend to those units of state government outside of the executive branch that, as defined, are neither state nor nonstate agencies.

Conclusion
Accordingly, it is my opinion that OSIG is not required to assume all duties, powers, and resources from the predecessor entities. It is further my opinion that the jurisdiction of OSIG is limited to executive branch agencies; non-governmental entities that are wholly or principally supported by state funds not otherwise excepted by the definition of "nonstate agency;" and public institutions of higher education to the extent that there are allegations of fraud, waste, abuse, or corruption concerning either the president of the institution or such institution's internal audit department.

With kindest regards, I am

Kenneth T. Cuccinelli, II
Attorney General