Attorney General John Formella told the Fiscal Committee on Oct. 17 that his office is seeking supplemental litigation funding for the fiscal year but has reduced the request compared with prior years by cutting expenses and spreading work inside the office.

Formella said the collective request before the committee was roughly $4.3 million in addition to an initial $350,000 budgeted amount. He described about $2.6 million in civil-bureau projected expenses, with about $1.5 million of that tied to YDC-related litigation, roughly $1 million for criminal-bureau costs, and approximately $600,000 for other civil matters.

Committee members pressed Formella about a cluster of YDC claims and how prior settlement administrator awards were handled after the statute changed. Formella said the office did not accept approximately 20% of awards in some sets of claims (specifically those involving counsel identified publicly in pleadings) and that in other cases the office negotiated lower amounts; overall he said the majority of awards were accepted or resolved. He described two components that factor into settlements: the formulaic multiplier and a qualitative credibility assessment of supporting evidence; the department said in some cases it found the qualitative component insufficiently applied when awards were issued.

Formella said the office attends every resolution proceeding and sees the same evidence as the administrator. He acknowledged there may be claims where the process has not yet concluded and said that if a claim is determined to be credible through employment processes, appropriate employment action will be taken. He cautioned that settling a claim is not always the same as an employment-action determination; settlements can occur without an employment finding.

The Legislative Budget Assistant's audit team (LBA) presented the Department of Justice financial-audit report for the fiscal year ended June 30, 2024. Audit manager Colin Quinn summarized the report: five observations (three internal control observations, two state compliance observations), no material weaknesses, and department concurrence with four observations and partial concurrence with one. The LBA noted that a complete set of financial statements was not presented, producing a modified auditor's opinion for that reason.

Key audit observations the LBA highlighted included:
- The department should adopt formal policies and procedures for administering installment payments related to the YDC settlement fund; the LBA noted more than $80 million planned to be paid from the fund through the relevant fiscal period and recommended formal controls to ensure consistency and avoid penalties.
- Establishment of a formal risk assessment process for functions that lack one.
- Creation and maintenance of a disaster recovery plan and business continuity plan.
- Adoption of required administrative rules (including victim-related protocols currently maintained as department protocols rather than formal rules) and timely filing of certain statutorily required reports.

Formella told the committee the department has draft policies and procedures for installment payments and that those documents are essentially ready to be finalized as installment payments begin this October. He said the department will work with the LBA to finalize corrective steps and timelines and acknowledged certain reports were late; he said the department has filed the most recently overdue biennial report and will file other required reports on schedule. In several cases he indicated the department might seek narrow legislative changes to clarify statutory requirements (for example, rules the department believes should remain flexible and managed as protocols rather than fixed rules). Formella also described the cremation-fee issue flagged by the LBA as one that may be resolved by statute to authorize a practice the Office of the Chief Medical Examiner has historically followed in limited cases.

The committee accepted the audit report as presented by the LBA. Committee leadership asked the department to provide a written corrective-action plan and milestones to address unresolved items and to identify any required legislative steps so the committee and the governor's office can track progress.