by Rebecca Hausmann

If you’re anything like me, you might find type 1, type 2, and type 3 transfers a little confusing. First of all, what are they for? What’s the difference between the three types of transfers? And just why, exactly, are they called “transfers”, even when a new agency is created?

What are the transfers for?

Type 1, type 2, and type 3 transfers only apply to executive branch agencies and not to judicial or legislative branch agencies. Type 1, type 2, and type 3 transfers are a way of generally describing the powers and duties of a state agency (which includes a division, section, board, institution, commission, etc.) and the agency’s relationship with the department in which it is placed without having to list each of them separately for each agency. Section 24-1-105, C.R.S., sets out the three types of “transfers”.

When an agency is transferred by bill from one department to another, the General Assembly can transfer it with all the same powers and duties that it has in its current department or it can increase or decrease its powers simply by stating what type of transfer it is making. Similarly, a newly created agency is created in its department “as if it were transferred by” a specified type of transfer. In this way, the powers of the agency can be described without having to go into great detail. Having the three types of transfers set out in statute also helps to makes the powers of the different agencies uniform.

What is the difference between the three types of transfers?

In a type 1 transfer, an agency or part of an agency is transferred intact to another principal department. The transfer creates a relationship in which the subordinate agency is administered under the direction and supervision of that principal department but exercises its powers, duties, and functions independently of the head of that department. The most important powers an agency retains with a type 1 transfer – powers that may be exercised in whatever way the agency determines, even without the approval of the executive director – are the promulgation of rules and standards and the rendering of administrative findings, orders, and adjudications. Type 1 transfer powers also include regulation, licensing, and registration. However, the executive director of the department has all “budgeting, purchasing, planning, and related management functions” and any powers, duties, and functions not specified by statute as belonging to the agency being transferred are performed under the direction and supervision of the head of the principal department.

In a type 2 transfer, all or part of an existing department or agency is transferred to another principal department. Under a type 2 transfer, all statutory authority, powers, duties, functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds, including the functions of budgeting, purchasing, and planning, are transferred to the principal department and the agency being transferred does not retain any independent powers.

A type 3 transfer abolishes an existing department or agency and transfers all or part of its powers, duties, functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds to a principal department. Because departments and agencies are not often abolished, a type 3 transfer is rarely used.

Why are they called “transfers” even when a new agency is created?

When the Administrative Organization Act of 1968, article 1 of title 24, C.R.S., was enacted, the General Assembly declared its intent to create an “orderly organizational structure of state government” that grouped state agencies into a limited number of principal departments primarily according to function to eliminate overlapping and duplication of effort. (See section 24-1-101, C.R.S.) Since there were already agencies in existence, in order to restructure state government, the General Assembly wanted to move those agencies into the departments created in the 1968 Act and needed a way “to provide for an orderly transfer of powers, duties, and functions of the various state agencies to such principal departments with a minimum of disruption of governmental services and functions and with a minimum of expense.” (See section 24-1-101, C.R.S.) Type 1, type 2, and type 3 transfers enabled the General Assembly to transfer, add to, or eliminate the powers and duties of the existing state agencies when they were moved into the newly created departments or to eliminate entire agencies.

Since section 24-1-105, C.R.S., sets out the different types of “transfers” and describes the powers and duties assigned to an agency as a transfer, when new agencies are created, we now refer to them as being created “as if they were transferred” by a type 1, type 2, or type 3 transfer in order to precisely describe the powers and duties of the new agency.

Sources: Article 1 of title 24, C.R.S.
The Legislative Drafting Manual