“Since I got here (in 2007) I made it clear that self-funding (the office) was a goal,” said McGauley, who since then has transformed the office into a nearly paperless operation that more than pays for itself by generating annual fees in excess of $600,000.
And that, according to the State Board of Accounts, may earn McGauley not praise but criticism when his office is audited next year.
In a letter, State Examiner Bruce Hartman said the money in county recorders' “perpetuation” funds is available for the “preservation of records and the improvement of record-seeking systems and equipment” but “should not be used to fund the normal operating, administrative or accounting functions of the recorder's office.
“This is not to be construed to be a legal opinion, but it is the position we would take during the audit of the county,” Hartman concluded.
In the legal opinion of two county attorneys, however, McGauley is doing precisely what Indiana law allows.
Although Carrie Hawk Gutman and Thomas Hardin agree with the state that the perpetuation fund may be used for “items like salaries, benefits and wages only to the extent that the expense is for the preservation of records,” they argue in a letter to McGauley and county Auditor Tera Klutz that “every employee in the Recorder's office . . . are performing the function of preservation of records.”
This is more than a simple bureaucratic or legal difference of opinion. As recent headlines have made clear, a still-sluggish economy and state-imposed property tax caps have affected governments' traditional sources of revenue, making fees not only more equitable (people pay for services they actually use) but necessary.
According to its web site, the recorder's office preserves many of the community's most important records, ranging from home mortgages and neighborhood covenants to business names and military discharge documents. The office handles more than 76,000 documents every year.
County Council, in fact, is constantly asking departments to reduce their dependence on taxes, funding operations through fees wherever possible in order to make more money available to departments that can't support themselves.
“If the state eventually concludes that the county general fund should be paying for our staff, then that's what we will do,” McGauley said. “But I think that, especially considering the stresses the county budget is under, it is bad policy to use tax dollars to cover what our fees will clearly self-fund. When I hear that, I fear that it could cost someone a job (by forcing the transfer of tax dollars to the recorder's office from other departments).”
One could suggest that an influx of tax dollars should allow McGauley to reduce fees or transfer some of his “windfall” to the county for other uses. But, again, that's not how government works. Both his fees and his inability to return any unused portion of them to the county's general fund are prohibited by state law. Nor, he said, is he planning any major upgrades that would require more than the $1 million in fees the office is holding in reserve.
“We've gone through an epic upgrade in technology. We're where we need to be for years to come,” he said.
So McGauley, a former News-Sentinel reporter who has also cut staff by 25 percent since taking office, faces the bizarre prospect of being reprimanded by the state for a practice County Council promoted and applauded while benefiting the public.
To be fair, state officials no doubt are doing their best to interpret and enforce an ambiguous law. And McGauley admits some of his fellow recorders in smaller counties would be happy to see the state's position prevail, so their Councils will not also ask them to make do with less.
“This is a test case. There is no guidance (in state law),” said McGauley, who has spoken with at least one state legislator about providing the necessary clarity. “This drives me nuts. Either fix the statute or leave me alone.”
Good advice. Remember this the next time somebody claims government "operates like a business."