Kansas Attorney General Opinion 1992-093

1992-093Kanag

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ROBERT T. STEPHAN
ATTORNEY GENERAL
July 15, 1992
ATTORNEY GENERAL OPINION NO. 92-93
Gary K. Jones
Andale City Attorney
830 Olive W. Garvey Building
200 West Douglas
Wichita, Kansas 67202-3094
Re: State Departments; Public Officers and
Employees--Municipal Accounting Board--Annual
Audits of School Districts and Certain
Municipalities; a City's Ability to Exempt Itself
From Annual Audits
Synopsis: A city may, by charter ordinance, exempt itself
from certain accounting and audit requirements.
Under the facts presented, city of Andale has
failed to exempt itself from the audit requirements
of K.S.A. 1991 Supp. 75-1122. Cited herein:
K.S.A. 75-1117; 75-1120a; 75-1121; K.S.A. 1991
Supp. 75-1122; Kan. Const., art. 12, S 5.
Dear Mr. Jones:
You have inquired whether the city of Andale has exempted
itself by charter ordinance from the audit requirements of
K.S.A. 1991 Supp. 75-1122 and if not, whether it can
retroactively exempt itself from the audit requirements for
past years in which audits were due but not completed.
K.S.A. 75-1117 et seq. establishes accounting and
reporting requirements for municipalities. K.S.A. 75-1117
defines municipality to include substantially all municipal
and quasi-municipal corporations, political subdivisions, and
taxing districts.
Two primary obligations are placed on municipalities. First,
under K.S.A. 75-1120a, municipalities are required to adopt
"generally accepted accounting principals," (GAAP). If the
municipality has annual gross receipts of less than $275,000
and does not operate a utility, the municipality need not
maintain fixed asset records as part of the use of GAAP
requirements. Any municipality may apply for a waiver of the
GAAP requirements. K.S.A. 75-1120a(1).
The second major component of these statutes is the annual
audit requirements found in K.S.A. 1991 Supp. 75-1122. Under
subsection (a) any municipality with annual gross receipts
over $275,000, or which has general obligations or revenue
bonds outstanding in excess of $275,000, is required to have
an annual audit, unless otherwise excused.
A city may exempt itself by charter ordinance from an
"enactment" that applies nonuniformly to all cities. City
of Junction City v. Griffin, 227 Kan. 332, Syl. 5 5 (1980),
Blevins v. Heibert, 247 Kan. 1 (1990). The statutes
ranging from K.S.A. 75-1117 to 75-1130 all appear to be part
of a single "enactment" -- they were either originally part of
the same original bill (L. 1953. ch. 375) or they were added
in later bills which also amended the other previously enacted
sections, (e.g., L. 1978, ch. 334). This "enactment" is
replete with non-uniform provisions. As such, a city may, by
charter ordinance, opt-out of any of the enactment's
requirements given its nonuniform application. This result
is in accord with Attorney General Opinion No. 82-206.
Article 12, section 5 of the Kansas constitution prescribes
the following requirements for adoption of a charter ordinance:
"Such charter ordinance shall be so
titled, shall designate specifically the
enactment of the legislature or part
thereof made inapplicable to such city by
the adoption of such ordinance and
contain the substitute and additional
provisions, if any, and shall require a
two-thirds vote of the members-elect of
the governing body of such city. Every
charter ordinance shall be published once
each week for two consecutive weeks in the
official city newspaper or, if there is
none, in a newspaper of general
circulation in the city." (Emphasis
added.)
The charter ordinance in question here provides, in relevant
part:
"Section 1. That the City of Andale,
Kansas a city of the third class, who and
by virtue of the power vested in it by
Article 12, Section 5, of the Constitution
of the State of Kansas, hereby elects to
exempt itself from the provisions of
K.S.A. 75-1117, 75-1120, 75-1121, and
75-1122, as amended by the 1978
supplements thereto, and makes said
statutes unapplicable to said city
insofar as said statutes require the City
of Andale, Kansas, to maintain fixed
asset records and accountings."
The city of Andale believes that the ordinance exempts the
city from all the requirements of K.S.A. 1991 Supp. 75-1122
and that no annual audit is required. The division of
accounts and reports in the department of administration takes
the position that the ordinance "charter[s] the city out of
the fixed asset records and accounting requirements when an
audit is done." (Emphasis added.)
The issue, then, is the meaning of the words in the ordinance
"fixed asset records and accountings".
Rules of interpretation of statutes are equally applicable to
municipal ordinances. Phillips v. Viecx, 210 Kan. 612
(1972). A rule of statutory construction is that no part of a
statute should be treated as superfluous and that the statute
should be construed to give effect to every word and clause.
Guff v. Aetna Life and Casualty Co., 1 Kan.App.2d 171,
175 (1977).
Section 1 of charter ordinance 6 can be broken down into three
parts. First is the general introductory language of no
relevance here. Next is a general statement: "[Andale]
elects to exempt itself from the provisions of K.S.A. 75-1117,
75-1120, 75-1121 and 75-1122, as amended by the 1978
supplements thereto. . . ." While this second statement alone
might be enough to opt Andale out of all requirements in the
statutes, the ordinance does not end here.
The last phrase in the ordinance is: "and makes said statutes
inapplicable to said city insofar as said statutes require the
City of Andale, Kansas, to main fixed asset records and
accountings." To give this last limiting phrase meaning,
Andale must be specifically opting-out of something less
than all of these statutes' requirements.
As noted above, K.S.A. 1991 Supp. 75-1122 imposes two general
requirements: (1) utilization of generally accepted
accounting procedures and the accompanying maintenance of
fixed asset records, and (2) an annual audit. By referring
and "fixed asset records and accountings," charter ordinance 6
appears to have opted the city of Andale out of only part of
the enactment's first requirement, that being maintaining
fixed asset records and accountings which is a part of
generally accepted accounting principals. Given the limiting
language of the final phrase of the ordinance, if the city of
Andale intended to opt out of the audit requirements, it has
failed to specifically so state as required by article 12,
section 5.
Your next question concerns whether, by charter ordinance, the
city of Andale can opt-out of audits for past years which
have yet to be done -- in essence a retroactive charter
ordinance.
There are no reported Kansas cases concerning whether an
ordinance may have retroactive application. McQuillin
states that absent a constitutional prohibition, there is no
rule against an ordinance having retroactive application, so
long as it does not interfere with contract or vested rights.
6 McQuillin, Municipal Corporations § 20.70 (3rd ed.
1988).
Because a charter ordinance retroactively opting out of the
audit requirements would not interfere with anyone's vested
rights, we see no legal objection to such an ordinance if the
city of Andale were to enact one.
Very truly yours,
ROBERT T. STEPHAN
Attorney General of Kansas
Steve Phillips
Assistant Attorney General
RTS:JLM:SP:jm

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