IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE
February 6, 2002 Session
MEMPHIS PUBLISHING COMPANY, ET AL., v.
CHEROKEE CHILDREN & FAMILY SERVICES, INC., ET AL.
Appeal by permission from the Court of Appeals, Middle Section
Circuit Court for Shelby County
No. CT-002141-00 John R. McCarroll, Jr., Judge
No. M2000-01705-SC-R11-CV - Filed September 5, 2002
AND
JOHN MORGAN v. CHEROKEE CHILDREN & FAMILY SERVICES, INC.
Appeal by permission from the Court of Appeals, Middle Section
Chancery Court for Davidson County
No. 00-2419-II Carol L. McCoy, Chancellor
No. M2000-02382-SC-R11-CV - Filed September 5, 2002
These two cases, consolidated for consideration, present two issues of enormous significance. First,
we must decide whether a non-profit corporation that provides privatized services to a governmental
entity is subject to the public access requirements of the Tennessee Public Records Act. The second
issue concerns the authority of the state, acting through the Comptroller of the Treasury, to require
said corporation to submit to a state audit. In Memphis Publishing Co. v. Cherokee Children &
Family Services, Inc., Memphis Publishing Company and others seek access to records belonging
to Cherokee Children & Family Services, Inc., a non-profit corporation which contracted with the
Tennessee Department of Human Services to help administer a state-subsidized day care program.
In seeking access to the records, the plaintiffs rely on both the Tennessee Public Records Act and
provisions in the contracts between the corporation and the state. In Morgan v. Cherokee Children
& Family Services, Inc., the Comptroller of the Treasury, John Morgan, seeks to require the same
corporation to submit to a state audit. As authority for the audit, Morgan relies upon the contracts
at issue in Memphis Publishing Co. and upon 2000 Tenn. Pub. Acts. 960 (now codified at Tenn.
Code Ann. § 8-4-116 (Supp. 2001)), which authorizes the Comptroller to audit the records of entities
which derive fifty percent or more of their gross revenue from state or local government. The trial
courts in the two cases found that Cherokee Children & Family Services, Inc. was not a
governmental agency, but that all records in its possession were state property pursuant to the
contracts between it and the state. Additionally, the trial court in Morgan found that an audit was
authorized by 2000 Tenn. Pub. Acts 960. The Court of Appeals reversed, holding that (1) the
contractual provisions at issue did not render the records public; (2) Cherokee Children & Family
Services, Inc. was not a governmental agency subject to the Public Records Act; and (3) retroactive
application of 2000 Tenn. Pub. Acts 960 in Morgan would be unconstitutional. We granted
permission to appeal. Because we have determined, for the reasons outlined below, that Cherokee
Children & Family Services, Inc. operates as the “functional equivalent” of a governmental (state)
agency, we hold that all of its records are subject to the Tennessee Public Records Act and therefore
are accessible by the public. This resolution effectively resolves the audit issue, and a separate
decision thereupon is unnecessary. Accordingly, the judgment of the Court of Appeals is reversed,
and the cause is remanded to the trial court for further proceedings consistent with this opinion.
Tenn. R. App. P. 11 Appeal by Permission; Judgment of the Court of Appeals Reversed
ADOLPHO A. BIRCH, JR., J., delivered the opinion of the court, in which FRANK DROWOTA , III, C.J.,
E. RILEY ANDERSON, JANICE M. HOLDER, AND WILLIAM M. BARKER, JJ. joined.
Lucian T. Pera, Kathy Laughter Laizure, and Brian S. Faughnan, Memphis, Tennessee, for the
appellants, Memphis Publishing Company and Mike Kerr.
Alan J. Wade, Thomas Lang Wiseman, and Lori Hackleman Patterson, Memphis, Tennessee, for the
appellee, Cherokee Children & Family Services, Inc.
Paul G. Summers, Attorney General and Reporter, Michael E. Moore, Solicitor General, Albert L.
Partee, III, Senior Counsel, for the appellant, John Morgan (in Morgan).
Paul G. Summers, Attorney General and Reporter, Michael E. Moore, Solicitor General, Albert L.
Partee, III, Senior Counsel, and William W. Leech, Assistant Attorney General, for the appellee,
Tennessee Department of Human Services (in Memphis Publishing Co.).
OPINION
I. Facts and Procedural History
Cherokee Children & Family Services, Inc. (Cherokee) is a non-profit public benefit
corporation. Created in December 1989, its charter stated that the corporation was formed to
“provide comprehensive social service.” A few months after its creation, Cherokee entered into a
contract with the state, operating through the Tennessee Department of Human Services (TDHS),
to provide services related to child care. It then amended its charter by adding the following:
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The purpose of Cherokee is to provide transitional child care services for children of
low-income families referred by the Department of Human Services. Funds for this
project are provided by Federal and State block grants which are used for tuition
payments and administrative expenses.
The services provided by [Cherokee] include the listing and classification of child
care providers, referrals of qualified families to appropriate child care centers, and
the monitoring and supervision of each placement under guidelines provided by
DHS. Upon the dissolution of Cherokee . . . , all remaining assets will be returned
to the Federal and State offices which supplied the original grants.
Between 1990 and 2000, Cherokee contracted with TDHS to perform certain functions
related to government-subsidized child care services in Shelby County. It is important to note here
that Cherokee did not “care for” or “keep” children in the strictest sense. Rather, it served as a
“brokering agency” that screened applicants and assisted eligible applicants in locating approved
child care providers. TDHS paid the child care subsidies directly to the care centers; Cherokee,
therefore, was not involved in the payment of subsidies for the child care services. Virtually all of
Cherokee’s operating revenue, however, came from government sources.
Over the course of dealings between Cherokee and the State, three different contracts
governed their business relationship. The first contract, executed in 1990, was a grant contract under
which Cherokee performed services on a cost-reimbursement basis. Prior to the commencement of
any work by Cherokee, the State would approve “allowable costs” in advance, then Cherokee would
spend funds to perform the work and invoice the State for reimbursement of the approved costs.
The second contract, in effect from 1992 to 1999, changed the method of payment to a fee-
for-services arrangement, under which Cherokee was paid a “commission” calculated as a
percentage of the funds disbursed by TDHS to day care centers as a result of Cherokee’s
administrative services. The money received by Cherokee under the 1992 contract was dependent
only on satisfactory performance of the work and on the total funds disbursed by the State to day care
services; the State disclaimed any responsibility for losses or taxes incurred by Cherokee in the
performance of the contract. The contract contained a provision, however, allowing the State the
right to audit Cherokee’s records with respect to work performed or money received under the
contract. The State routinely exercised this right by conducting regular monitoring visits and by
reviewing Cherokee’s client files.
Under the third and final contract, which was in effect from January 1, 2000, until its
termination by the State on August 21, 2000, the parties returned to the cost reimbursement plan
utilized in the 1990 contract. As in the 1992 contract, the State was allowed to audit Cherokee’s
records relating to work performed or money received under the contract; in addition, Cherokee was
required to submit an annual independent audit to the State after each reporting period.
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In late 1999, The Commercial Appeal, a daily newspaper published by Memphis Publishing
Company (MPC) and serving the Memphis area, developed an interest in Cherokee’s operations and
asserted its right to inspect Cherokee’s records pursuant to the Tennessee Public Records Act (the
Act), which provides in pertinent part that “all state, county and municipal records . . . shall at all
times, during business hours, be open for personal inspection by any citizen of Tennessee . . . .”
Tenn. Code Ann. § 10-7-503(a) (1999 and Supp. 2001). Despite several requests and extended
negotiations, Cherokee refused to tender the records. Consequently, in March 2000, MPC filed a
petition seeking access to eight categories of records in Cherokee’s possession.1 MPC sought:
1. All rental agreements, leases, receipts of payments and other records related
to any rental agreements between Cherokee and Affordable Homes;
2. All receipts, invoices, contracts, and other records pertaining to any and all
professional and/or consulting fees paid by Cherokee since January 1, 1995;
3. Records documenting any and all payments to officers and directors of
Cherokee since January 1, 1997;
4. All records, including without limitation invoices, receipts, and expense
reports, documenting expenses for travel, conferences, conventions, meetings
and meals since January 1, 1995, incurred and/or paid by Cherokee, as
reflected in Cherokee’s annual form 990 reports filed with the Internal
Revenue Service;
5. All invoices, receipts, and other records detailing and documenting any or all
“contributions” identified or listed in Cherokee’s annual form 990 reports to
the Internal Revenue Service from January 1, 1995, to the present;
6. All canceled checks and monthly statements involving all bank accounts
maintained by Cherokee from January 1, 1995, to the present;
7. All invoices, receipts and any other records documenting or pertaining to
rents paid by Cherokee from January 1, 1995, to the present; and
8. All contracts, consulting agreements, leases, retainers or other binding
agreements entered into by Cherokee from January 1, 1990, to the present.
MPC asserted that Cherokee’s records were public records subject to the Act because the terms of
the contract between Cherokee and TDHS rendered the records public property. In addition, MPC
asserted that because of the services Cherokee performed, it should be deemed a state agency for
purposes of the Act.
1
Mike Kerr, Assistant M anaging Ed itor of The Commercial Appeal, was also a party to the petition.
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During the same time that MPC was seeking access to Cherokee’s records, John Morgan, the
Comptroller of the Treasury,2 notified Cherokee that the State intended to conduct an audit of
Cherokee’s records to investigate Cherokee’s use of state-provided transportation and registration
funds. Thereafter, Morgan requested “all bank records (statements, canceled checks and deposits)
related to transportation fees paid to or through [Cherokee] for the period [of] September 1, 1998,
through January 31, 2000.” Shortly after the audit began, however, Cherokee denied the auditors
further access to its bank records. After additional demands for the records were refused, Morgan
filed suit in the Davidson County Chancery Court seeking a mandatory injunction requiring
Cherokee to submit to the audit.
In the suit, Morgan relied upon two grounds for access to the records. First, citing the same
contractual provisions relied upon by MPC in its suit, he contended that all of Cherokee’s records
were property of the State and that the Comptroller would have access to any documents deemed
public records pursuant to the Tennessee Public Records Act. Second, Morgan contended that
recently enacted legislation, 2000 Tenn. Pub. Acts ch. 960, granted the Comptroller authority,
retroactive to 1992, to audit any entity which contracted with the state or local governments to
provide government services and which received fifty percent or more of its gross revenue from
governmental sources.3
2
The Comptroller of the Treasury is a constitutional officer to whom the legislature has given wide-ranging
duties in overseeing the use o f public funds. See generally Tenn. Const. Art. VII § 3; Tenn. Code Ann. § § 8-4 -101 to
-407 (1993 and Supp. 200 1).
3
Chapter 960 has since been codified at Tenn. Code Ann. § 8-4 -116 (Sup p. 20 01). To avoid confusion, it will
be referred to by the forme r title. Chap ter 96 0 provides in pertinent part:
(a) Entities contracting with the state or local governments to perform government services shall be
subject to audit by the comptroller of the treasury to assure that public funds a re exp ended in
acco rdance with the pub lic purp ose for which they were con tracted .
(b) Notwithstanding any other pro vision o f law or existing co ntract, the comptroller of the treasury is
hereby authorized to conduct an audit of the records of any entity contracting with the State of
Tennessee or local government entities . . . if such contracting entity derives fifty percent (50%) o r
more of its gross revenue from such state or local entity or entities. All books, reco rds, documents, and
other evidence p ertaining to the receipt, accounting for, use and/or expe nditure of any public funds
by any such contracting entity shall be available for examination by the comptroller of the treasury
during norm al business hours through on-site review. In the alternative, and in the com ptroller’s sole
discretion, such records may be provided through the mail or other methods of data transmission. Such
audits shall take place as often as necessary, and to the extent necessary, in the discretion of the
comptroller of the treasury and in conformance with generally accepted auditing standard s, to
determine whether public funds received by the entity were properly accounted for and expe nded in
accordance with the public purpose for which the entity was contracted. The comptroller of the
treasury shall have such autho rity notwithstanding whether the contract is in the form o f a
fee-for-service contra ct, a vendor contra ct, a cost reimbursem ent contract, any combination o f these
types of contract, or any other fo rm of contract.
....
(continued...)
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In Memphis Publishing Co., the trial court rejected MPC’s claim that Cherokee was a
governmental agency, finding instead that it was an independent contractor. It further held, however,
that all of Cherokee’s records were the property of the State pursuant to the contracts between
Cherokee and the State and that the records, therefore, were subject to access pursuant to the
Tennessee Public Records Act. Similarly, the trial court in Morgan found that Chapter 960 and
Cherokee’s contracts with the State provided the Comptroller a summary remedy, and it ordered
Cherokee to submit to an audit.
Cherokee appealed, and the Court of Appeals consolidated the cases for consideration.4 In
two opinions released together, the intermediate court reversed both trial courts’ orders granting
access to Cherokee’s records. In Memphis Publishing Co., the appellate court agreed that Cherokee
was an independent contractor, not a governmental agency. It further held, however, that the trial
court’s grant of access to all records in Cherokee’s possession was overbroad; instead, the Court of
Appeals interpreted the contractual provisions designating all of Cherokee’s records as state property
to refer only to records concerning work performed or money received under the contracts. In
Morgan, the appellate court reiterated this narrow interpretation of the contracts between Cherokee
and the State, and it held that the Comptroller could not audit Cherokee’s records pursuant to
Chapter 960 because application of the statute to Cherokee would amount to an unconstitutional
“retrospective law, or law impairing the obligation of contracts,” in violation of Article 1, § 20 of
the Tennessee Constitution.
We granted permission to appeal in both Memphis Publishing Co. and Morgan. Because the
facts and issues in the two cases are interconnected, we accept the cases as consolidated. After
thorough review of the record and relevant authority, we hold that all of Cherokee’s records are
subject to access by the public and the Comptroller under the terms of the Tennessee Public Records
Act. Accordingly, we reverse the judgments of the Court of Appeals. Because our holding grants
the Comptroller access to the records needed for an audit through application of the Act, it is not
necessary to address the constitutionality of Chapter 960 or the Comptroller’s authority pursuant
thereto.
II. Standard of Review
3
(...continued)
SECTION 2. The provisions of this ac t are de clared to be re med ial in nature and to that end shall
app ly to all contracts in fo rce wh en this act takes effec t.
The pro visions o f this act shall b e retroactive to January 1, 1992 .
4
Memp his Publishing Co. was transferred from the W estern S ection of the C ourt of App eals to the M iddle
Section. The cases were consolidated for the purpose of consideration, but the Court of Appeals directed in its order
that the record s of the two cases w ould be maintained sep arately and the cases w ould be briefed separately.
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Our determination whether the Tennessee Public Records Act applies to the records in
Cherokee’s possession is a question of law. We review questions of law de novo with no
presumption of correctness accorded to the findings of the court below. See Gleaves v. Checker Cab
Transit Corp., Inc., 15 S.W.3d 799, 802-03 (Tenn. 2000); Ridings v. Ralph M. Parsons Co., 914
S.W.2d 69, 80 (Tenn. 1996). To a great extent, our holding hinges upon principles of statutory
construction, for our decision whether Cherokee’s records are subject to the Act is controlled by the
meaning of the term “public records” as used in the Act. When interpreting a statute, “[t]he most
basic principle of statutory construction is to ascertain and give effect to the legislative intent without
unduly restricting or expanding [the] statute’s coverage beyond its intended scope.” Owens v. State,
908 S.W.2d 923, 926 (Tenn. 1995). The General Assembly has declared that the Act “shall be
broadly construed so as to give the fullest possible public access to public records.” Tenn. Code
Ann. § 10-7-505(d) (1999). “Our . . . cases reflect the broad construction of ‘record’ under the Act
and a consistent adherence to the policy of full public access.” Tennessean v. Electric Power Bd.,
979 S.W.2d 279, 301 (Tenn. 1998). Accordingly, we conduct our review de novo, and we interpret
the terms of the Act liberally to enforce the public interest in open access to the records of state,
county, and municipal governmental entities.
III. Analysis
The Tennessee Public Records Act “governs the right of access to records of government
agencies in this state.” Cole v. Campbell, 968 S.W.2d 274, 275 (Tenn. 1998). Through its
provisions, the Act serves a crucial role in promoting accountability in government through public
oversight of governmental activities. Cf. Forsberg v. Hous. Auth. of Miami Beach, 455 So. 2d 373,
378 (Fla. 1984) (stating that the purpose of Florida’s public records act, which is similar to
Tennessee’s, “is to promote public awareness and knowledge of governmental actions in order to
ensure that governmental officials and agencies remain accountable to the people”).
In identifying which records must be open to public inspection, the Act provides in pertinent
part, “[A]ll state, county and municipal records . . . shall at all times, during business hours, be open
for personal inspection by any citizen of Tennessee, and those in charge of such records shall not
refuse such right of inspection to any citizen, unless otherwise provided by state law.” Tenn. Code
Ann. § 10-7-503(a) (1999 and Supp. 2001).5 Little guidance is provided, however, in defining
precisely which records are “state, county and municipal records” under this provision. The
definition of public records in Part 3 of the Act, regarding the Public Records Commission, provides
imperfect guidance, as the definitions in that part do not expressly apply to other parts of the Act:
Definitions. – As used in this part, unless the context otherwise requires:
....
5
Other parts of the Act provide exceptions to this broad general provision by setting forth classes of confidential
records not sub ject to inspection. See, e.g., Tenn. Code Ann. § 10-7-504 (1999 and Supp . 2001 ) and statutes cross-
referenced thereunder. None of these exceptions are relevant here.
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(6) “Public record or records” or “state record or records” means all documents,
papers, letters, maps, books, photographs, microfilms, electronic data processing files
and output, films, sound recordings, or other material, regardless of physical form or
characteristics made or received pursuant to law or ordinance or in connection with
the transaction of official business by any governmental agency.
Tenn. Code Ann. § 10-7-301 (1999 and Supp. 2001). Nevertheless, even this definition does not
identify with precision how courts should determine whether any given record has been “made or
received pursuant to law or ordinance or in connection with the transaction of official business by
any governmental agency.”6
The Court of Appeals has taken a relatively narrow approach toward defining whose records
should be considered subject to the Act. In Memphis Publishing Co. v. Shelby County Health Care
Corp., the court addressed whether the Act allowed public access to personnel records of a not-for-
profit corporation established to operate the City of Memphis Hospital. 799 S.W.2d 225, 226 (Tenn.
Ct. App. 1990). The court emphasized that the corporation did not originate in the General
Assembly, but instead had been incorporated under the Tennessee General Corporation Act. Id. at
229.7 Thus, because the corporation had not been established as a governmental entity by legislative
determination, the court held that it could not be considered subject to the Act regardless of its public
function, public oversight, and public funding. Id. at 228-29.
In addition to the “legislative determination” approach set forth in Shelby County Health
Care Corp., the Court of Appeals also has looked to agency law when determining whether records
should be open to public scrutiny. In Creative Restaurants, Inc. v. City of Memphis, the court
addressed whether the Act would allow public inspection of certain subleases in the possession of
a private, for-profit corporation which was involved in an “urban renewal” project for the City of
Memphis. 795 S.W.2d 672, 673 (Tenn. Ct. App. 1990). After outlining the complex contractual
relationship between the corporation and the city, the court observed that “[w]hile the parties have
been placed in the posture of lessor and lessee insofar as legal terminology is concerned, they are
substantially in the posture of principal and agent.” Id. at 678. This relationship, the court held, was
6
Another definition of “records” appears in Part 1 of the Act, which states that the term “sha ll be co nstrued to
mean any records of the cou nty legislative bod y and comm on law, circuit, crim inal, or chancery court, the register’s
boo ks, the surveyor’s and entry taker’s book, and all other public reco rds, req uired by law to be kept in the several courts
of this state.” Tenn. Code Ann. § 10-7-101 (1999). As the Court of Appeals noted in Creative Restaura nts, Inc. v. C ity
of Memp his, however, it is evident that the definition provided by this provision was not intende d to apply to other p arts
of the Act, and indeed, it is possible that the inclusion of that statute as part of the Act may be “a compiler’s error,
occurring in the renumbering of the 1980 edition of the Code.” 795 S.W .2d 672, 675 (Tenn. Ct. App. 1990 ).
7
The court further noted that the corporation did not claim governmental immunity from suit in tort actions and
was no t formally contro lled by the state. Id.
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sufficient under the circumstances of the case to establish the subleases as public records. Id.8 In
the case under submission, the Court of Appeals applied an agency analysis similar to that used in
Creative Restaurants, Inc. to conclude that Cherokee was an independent contractor and not an agent
of the State.
Our review of relevant authority, however, leads us to conclude that the law of agency is not
the ideal vehicle for determining whether records in the possession of a given private entity should
be subject to public scrutiny under the Act. The difficulty with the agency analysis arises because
of the growing trend toward privatization of governmental functions and services.
Since the 1980s, governmental entities in various parts of the nation have looked increasingly
to privatization as a possible solution to perceived problems of inefficiency or expense in the
provision of public services. See generally Craig D. Feiser, Protecting the Public’s Right to Know:
The Debate Over Privatization and Access to Government Information Under State Law, 27 Fla. St.
U.L. Rev. 825, 825-27 (2000). In typical privatization arrangements, the government, through a
contract or similar vehicle, delegates to a private entity the responsibility for performing a function
formerly performed by the government itself.9 The arrangement between Cherokee and the State in
the case under submission involves “[t]he most common form of privatization, called ‘contracting
out,’ [in which] the government contracts with a private entity to provide a service previously
performed by the government, or to provide a service for or on behalf of a government entity.” See
Feiser, supra, at 829.
Scholars have long debated the merits of privatization policies. Compare Joseph Caponio
and Janet Geffner, Does Privatization Affect Access to Government Information?, 5 Gov’t Info. Q.
147 (1998) (describing privatization as an efficient management tool when used properly); with
Shirley L. Mays, Privatization of Municipal Services: A Contagion in the Body Politic, 34 Duq. L.
Rev. 41 (1995) (asserting that “governments cannot turn over operation of essential government
services to private companies without abusing the trust of its citizens and putting them at risk”).
Only recently, however, has attention focused upon the ways in which public access to information
may be obstructed when governmental functions are transferred to the private sector. As one
commentator states, “Privatization may be desirable in itself, but it should not come without . . .
leaving public accountability intact. Not only should the public be able to monitor the private
company’s activities, but the monitoring should be on the same terms as when the public agency was
the information vendor.” Feiser, supra, at 833. Others note that the government may, intentionally
or unintentionally, shield records from the public by shifting them to private entities. Indeed, by
maintaining and controlling previously public records, private companies may control public access
to such records in ways that are “at odds with the very purpose of public records laws.” Matthew
Bunker and Charles Davis, Privatized Government Functions and Freedom of Information: Public
8
In addition, the court held, for similar reasons, that do cuments in the hands of a part-time city attorney were
pub lic reco rds because the atto rney wa s the city’s age nt. Id. at 678-79.
9
For an overview of how privatization arrangements function, see generally E .S. Sav as, Essay: Privatization
and the New Pub lic Management, 28 Fordham U rb. L.J. 1731 (2001 ).
-9-
Accountability in an Age of Private Governance, 75 Journalism and Mass Comm. Q. 464, 464-68
(1998).
Numerous other jurisdictions have examined how public records laws should apply in a
climate of increased privatization to ensure that public access, and hence governmental
accountability, is preserved. One widely-used approach, pioneered by the Connecticut Supreme
Court, balances several factors to determine whether a given private entity’s records should be open
to public inspection. See, e.g., Connecticut Humane Soc’y v. Freedom of Info. Comm’n, 591 A.2d
395, 397 (Conn. 1991). In Connecticut Humane Society, the court defined the term “public agency”
in state public records laws10 to include a private entity “that is the functional equivalent of a public
entity.” Id. at 396-97. The court stated:
In determining whether an entity is the functional equivalent of a public agency, we
consider the following criteria: (1) whether the entity performs a governmental
function; (2) the level of government funding; (3) the extent of government
involvement or regulation; and (4) whether the entity was created by the government.
Id. at 397 (internal quotations omitted). The court stressed that no single factor was dispositive to
this case-by-case analysis, asserting that “[i]n light of the myriad of organizational arrangements that
may be confronted, under the functional equivalency approach, ‘each new arrangement must be
examined anew and in its own context.’” Id. (quoting Washington Research Project, Inc. v.
Department of Health, Educ. & Welfare, 504 F.2d 238, 245-46 (D.C. Cir. 1974)).
A similar analysis has been applied in Maryland. See Abell Publ’g Co. v. Mezzanote, 464
A.2d 1068, 1074 (Md. 1983). In Mezzanote, the Court of Appeals of Maryland held that a non-profit
insurance guaranty association was subject to Maryland’s public records statute, whose terms
encompassed records made by “any branch of the State government, including the legislative,
judicial, and executive branches, by any branch of a political subdivision, and by any agency or
instrumentality of the State or a political subdivision.” Id. at 1069 (quoting Md. Code, Art. 76A §
1(b) (emphasis added)).11 In reaching its conclusion, the court rejected the contention that an entity
was subject to public records laws only if it were under complete control by the state. Id. at 1072.
Rather, the court proposed “a number of factors” to decide whether the private entity’s records
should be subject to public access, including the public purpose of the private entity, the “degree of
10
Pertinent provisions of Connecticut’s Freedom of Information Act mandated that public agencies provide
schedules of their meetings to members of the public upon request. See Connecticut Humane So c’y, 591 A.2d at 396
n.2 (quoting Co nn. Gen. Stat. § 1-21c). Additional portions of the Act defined “public agency” to include “any
executive, administrative or legislative office of the state or any political subdivision of the state and any state or town
agency, any department, institution, bureau, board, commission, authority, or official of the state . . . .” Id. at 396
(quoting Conn. Gen. Stat. § 1-18a(a)).
11
Maryland ’s Public Information Act, like Tennesse e’s Public Records Act, provid es that its provisions “shall
be broadly co nstrued in every instance with the view towa rd public access.” M d. Co de, A rt. 76A , § 1A , quoted in
Mezzanote, 464 A.2d at 1071.
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control exercised by” the government over the entity, whether the entity was created by statute, and
whether the entity was immune from tort liability. Id. at 1072-74. While the language used by
Maryland’s Court of Appeals was not identical to that of the Connecticut Supreme Court, its inquiry,
in essence, amounted to the same “functional equivalency” analysis.
Other states, including North Carolina, Oregon, Kansas, and Florida, also have used
comparable approaches in deciding whether public records statutes should apply to certain private
entities performing government functions. See News and Observer Publ’g Co. v. Wake County
Hosp. Sys., Inc., 284 S.E.2d 542, 544-49 (N.C. Ct. App. 1981); Marks v. McKenzie High School
Fact-Finding Team, 878 P.2d 417, 424-26 (Or. 1994); Kan. Op. Att’y Gen. 93-130 (1993), available
at 1993 Kan. AG LEXIS 116; see also News and Sun-Sentinel Co. v. Schwab, Twitty & Hanser
Architectural Group, 596 So. 2d 1029, 1031 (Fla. 1992); Feiser, supra, 837-44 (discussing these
cases).12 Federal courts applying the Freedom of Information Act also have favorably discussed the
functional equivalency analysis. See Ry. Labor Executives’ Ass’n v. Consol. Rail Corp., 580 F.
Supp 777, 778-79 (D.D.C. 1984).
Our review of authority from other jurisdictions persuades us that the functional equivalency
approach described above provides a superior means for applying public records laws to private
entities which perform “contracted out” governmental services. As the facts of these cases
demonstrate, private entities that perform public services on behalf of a government often do so as
independent contractors. Nonetheless, the public’s fundamental right to scrutinize the performance
of public services and the expenditure of public funds should not be subverted by government or by
private entity merely because public duties have been delegated to an independent contractor. When
a private entity’s relationship with the government is so extensive that the entity serves as the
functional equivalent of a governmental agency, the accountability created by public oversight
should be preserved.
12
Florida should be distinguished from the other jurisdictions discussed above because the terms of its pub lic
records statute explicitly extend to private entities “acting on behalf of a pub lic agency.” News and Sun-Sentinel Co.,
596 So. 2d at 1031 (quoting Fla. Stat. § 119.011(2 )). The factors used by Florida courts in determining whether a private
entity is acting on behalf of a public agency, however, are notable:
The factors includ e, but are not limited to: 1) the level of public funding; 2) com mingling of funds;
3) whether the activity was conducted on publicly owned property; 4) whether services contracted for
are an integral part of the public agency’s chosen decision-making process; 5) whether the private
entity is performing a governmental function or a function which the public agency otherw ise would
perform; 6) the extent of the public agency’s involvement with, regulation of, or control over the
private entity; 7) whether the private entity was created by the public agency; 8) whether the public
agency has a substantial financial interest in the private entity; and 9) for [whose] benefit the private
entity is functioning.
Id.
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Consequently, in light of our duty to construe the Tennessee Public Records Act liberally in
favor of “the fullest possible public access to public records,”13 we follow the Connecticut Supreme
Court and interpret records “made or received . . . in connection with the transaction of official
business by any governmental agency” to include those records in the hands of any private entity
which operates as the functional equivalent of a governmental agency.14 In making this
determination, we look to the totality of the circumstances in each given case, and no single factor
will be dispositive. The cornerstone of this analysis, of course, is whether and to what extent the
entity performs a governmental or public function, for we intend by our holding to ensure that a
governmental agency cannot, intentionally or unintentionally, avoid its disclosure obligations under
the Act by contractually delegating its responsibilities to a private entity. Beyond this consideration,
additional factors relevant to the analysis include, but are not limited to, (1) the level of government
funding of the entity; (2) the extent of government involvement with, regulation of, or control over
the entity; and (3) whether the entity was created by an act of the legislature or previously determined
by law to be open to public access.
We caution that our holding clearly is not intended to allow public access to the records of
every private entity which provides any specific, contracted-for services to governmental agencies.
A private business does not open its records to public scrutiny merely by doing business with, or
performing services on behalf of, state or municipal government. But when an entity assumes
responsibility for providing public functions to such an extent that it becomes the functional
equivalent of a governmental agency, the Tennessee Public Records Act guarantees that the entity
is held accountable to the public for its performance of those functions.
Having set forth the “functional equivalency” test, we next must apply that analysis to the
case under submission. Most critically, the services performed by Cherokee, providing child care
services for indigent families and supervising child care placements under TDHS guidelines, were
undeniably public in nature. Indeed, the record reflects that TDHS directly performed these services
prior to entering into the contracts with Cherokee. Cherokee’s involvement in providing these
services was extensive, with all of its employees performing services under the contracts with TDHS.
Indeed, because Cherokee’s business activities were, by its charter, dedicated exclusively to the
servicing of the TDHS contracts, all of its records necessarily relate to its state business. Moreover,
Cherokee’s operation was financed with public funds (over ninety-nine percent of its funding came
from governmental sources). In addition, although TDHS did not exercise complete control or
supervision over Cherokee, a significant level of governmental control and oversight is evidenced
by the provisions in the 1992 and 1999 contracts requiring advance State approval of “allowable
costs” under the contracts and the provisions in all three contracts authorizing State audits of
Cherokee’s activities. While it is true that: (1) Cherokee was privately incorporated rather than
created by the legislature; (2) the contracts disavowed any agency relationship between Cherokee
13
See Tenn. Cod e Ann. § 10-7-505(d) (19 99).
14
W e emphasize that our rationale is driven by our interpretation of the term “public records” in the Tennessee
Pub lic Records Act and by considerations unique to the policies furthered by the Act. Hence, our decision has no bearing
upon o ther areas of the law involving governm ental entities.
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and the State; and (3) the parties asserted that the State incurred no tort liability for Cherokee’s
activities, these considerations are outweighed by the other factors listed above. Accordingly, we
conclude that Cherokee served as the functional equivalent of a governmental agency, and so we
hold that the records in Cherokee’s possession are subject to public access pursuant to the terms of
the Tennessee Public Records Act. It follows, furthermore, that the Comptroller may have the same
access as the public to Cherokee’s records under the terms of the Act. Our holding renders it
unnecessary for us to reach the other issues raised by the parties, including the constitutionality of
Chapter 960, and we express no opinion on those issues.15
IV. Conclusion
For the foregoing reasons, we hold that Cherokee’s status as the functional equivalent of a
governmental agency is sufficient to place it within the scope of the Tennessee Public Records Act.
Accordingly, records in Cherokee’s possession shall be subject to inspection by MPC and the
Comptroller pursuant to the terms of the Act, and we remand the cause to the trial court for further
proceedings consistent with this opinion. Costs on appeal are taxed to Cherokee Children & Family
Services, Inc., for which execution may issue if necessary.
___________________________________
ADOLPHO A. BIRCH, JR., JUSTICE
15
Additiona lly, MP C asserts in its brief that attorney’s fees and costs should be assessed against Cherokee
because it “clearly refused to provide access to certain reco rds it knew were pub lic reco rds sub ject to the access
requirements of the T ennessee P ublic R ecords Act.” Under the Act, the de cision whether to award attorney’s fees is left
to the discretion of the trial court; consequently, we will not disturb that decision absent clear evidence of an abuse of
that discretion. Tenn. Code Ann. § 10-7 -505 (g) (1999 ); see also Aaron v. Aaron, 909 S.W.2d 408, 411 (Tenn. 1995)
(“The allowance of attorney’s fees is largely in the discretion of the trial court, and the appellate court will not interfere
except upon a clear showing o f abuse of that discretion.”). In the case under subm ission, the trial court denied attorney’s
fees, stating, “Because this decision involved a complex interpretation of controlling case law and contractual language,
Cherokee’s refusal to turn over documents to [MPC ] cannot be deemed willful.” Based on our review of the record, we
conclude that the trial court did not abuse its discretion in so holding, and therefore we affirm.
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