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STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR PATRICIA ANDERSON STATE AUDlTOR SUITE 500 525 PARK STREET SAINT PAUL, MN 55103-2139 (651)296-2551 (Voice) (651)296-4755 (Faxl state.allditor(@statc.mn.us (E-mail) 1-800-627-352'1 (Relay Service) Statement of Position Employee Recognition Programs and Events December 2004 Local units of government often ask whether they can spend money to hold holiday parties, employee banquets or other employee social events. These questions are motivated by a desire to celebrate a holiday or significant event in an employee's life or to generally boost morale in the workplace. While these motives are good, important limitations exist on the use of public funds for employee social and recognition events. The key question is whether a local government has legal authority for this type of spending. Generally, in order to spend money on something, a local government must have authority to do so. Authority for an expenditure may be specifically stated in a statute or charter, or it may be implied as necessary to do what an express power authorizes. The Minnesota Attorney General's Office has considered the issue several times and has consistently said that local governments do not have implied authority to sponsor employee social events simply because they have the express power to compensate employees. Instead, the Attorney General's pOSItIon is that non-monetary benefits must be specifically authorized by law or charter. Based on this rationale, the Attorney General's Office wrote to The Champlin city attorney in 1998, indicating that no statutory authority existed for a city to hold an annual employee appreciation dinner or to award employee recognition gifts to employees. The Attorney General's Office stated: "while an agreed upon monetary bonus might be provided as part of a salary plan to employees who meet performance or longevity standards, we are at a loss to locate authority for expenditures of funds for in-kind awards or social occasions of the type described." Soecific Statutory Authority Granted to Counties Counties (and the state government) have specific authority for a wellness and employee recognition program under Minn. Stat. S 15.46. This statute states "[a] county may establish and operate a program of preventive health and employee recognition services for county employees and may provide necessary staff, equipment, and facilities and may expend funds as necessary to achieve the objectives of the program," However, this authority does not extend to other local units of government.