Santa Clara University

Elected officials are likely to tell you that their jobs are 24/7, and that they must be available at any time to interact with the voters. I disagree.

While the oath of office commits an individual to serve the public, it does not anticipate round-the-clock access, especially for directors elected to special districts, often a part-time responsibility.

A recent investigative report showed elected officials from the Santa Clara Valley Water District in California, were reimbursed for things ranging from installation of in-home Internet access to attendance at social events. The NBC Bay Area reporters found not only were board members being paid for “official” board meetings, they were also charging for events where water district matters were not discussed. (They are also paid $286 when they meet with the district CEO.)

The district allows a “per-diem fee for attendance at events, as each member determines will best enable them to serve the District.” This broad definition has led to board members charging the public for membership fees in a Rotary Club, professional engineering societies, attendance at banquets and picnics, and the like. Directors  justify such expenses as a way of "interacting" with their constituents.

Two directors “maxed out” on the amount they could charge to the public for meeting fees alone: $34,323.60.   Director Patrick Kwok received $57,462 last year for meetings plus benefits and travel.

 Public scrutiny will lead to changes in some of these expenses, as many are unjustified.  A new practice will require posting on the Web this type of  spending by directors each quarter. Much more can and should be done to decrease spending and increase transparency.

To readers, the headline “Trenton Mayor Arrested in Corruption Investigation” may elicit a ho-hum reaction, but to those who care about ethics in government, it was just another painful reminder that some elected officials continue to use their powerful offices as places to steal from the public.

Mayor Tony Mack, his brother, and a sandwich shop owner have been accused of “conspiring to obstruct, delay and affect interstate commerce by extortion under color of official right.”

The investigation began only two months after the mayor took office in September 2010, according to a United States attorney. The sting involved Mr. Mack using his influence to support a parking garage. But the project was created by the investigators, and caught all three men in a series of lies and bribes. In 2009, a similar sting code -named “Bid Rig,” led to charges against 46 people. Those bribes were also attached to fictitious development projects.

Changing the culture of corruption in any organization is challenging. Changing the culture of corruption in a state where people openly brag, “We’re corruptible” seems impossible. But thorough investigations, vigorous prosecutions, and increased public scrutiny and media attention are all steps in the right direction.

My recent post on public pensions deals with the relationship between the burden of the payouts and the recent number of municipal bankruptcies.

In this op-ed I wrote for Newsday, I go into greater detail on how to look at pensions from an ethical perspective.

Wall Street has taken notice of municipal bankruptcies, and now it appears that the courts may become involved as well.

The question is whether or not pension commitments can be annulled when bond insurers come asking for their payments. In a column published by the Sacramento Bee, Stockton is used as an example of a city that borrowed $125 million from the bond market five years ago to cover increases in pension benefits. The city pays $29 million a year to the California Public Employees’ Retirement System to cover its annual pension obligation.

Stockton  has filed for bankruptcy, but to date has not put CalPERS, the nation’s largest public pension fund, on its bankruptcy list of creditors. Columnist Jon Ortiz writes, “Bond insurers say the city should cut CalPERS payments along with those to other creditors.”

Moody’s credit rating agency estimates 10 percent of California’s cities “have declared financial crisis.” Even Warren Buffet has left the municipal bond insurance business, signaling that the once-reliable municipal bonds are now risky business. Ultimately we will witness a battle between the bankruptcy law experts and those who are defending public pension obligations.

The future of education, public safety, libraries, and many more basics are at stake. At the end of the day, I don't think either side will be able to declare victory.

“A parade of state legislators has marched past the state Ethics Commission on their way to federal and state prisons.”

Thus begins an editorial in the Times-Tribune commenting on the state of government ethics in Pennsylvania. The state, whose motto is "Virtue, Liberty, Independence," was given a “generous” C+ in a recent “report card” on government integrity in the United States.

Two conflicts are in play. First, the governor and other legislative leaders are in charge of selecting members of the Ethics Commission, and these individuals are not confirmed by the legislature at large.

Second, the current budget reflects significant cuts – what the editorial characterizes as  an attempt to keep the commission “on a short leash.” A $197,000 cut under Governor Ed Rendel won approval; Governor Tom Corbett’s effort to reduce the $1.7 million budget by another $88,000 was defeated. The money allocated to ethics is insufficient give the size and political culture of the state.

Pennsylvania has a history of ethical misconduct in government. Numerous senators are facing federal corruption charges, and some have already been convicted. Absent the criminal charges, there have been clear ethical violations.

Reformers have introduced a bill to create an independent Public Integrity Commission, one with greater power. The legislation would create a 15-member committee with ethics law experts, a district attorney, and “good-government advocates.” That bill is “languishing” in the legislature.

An ethics commission is only effective if it is truly independent. I agree with the paper: “Such a watchdog agency would be a far more effective deterrent than the current agency. It should be an obvious reform with the state government bedeviled by corruption.”

Refusing to allow the televising of an important tax hearing last week adds to the cynicism about transparency in government.

California senate leader Darrell Steinberg has apologized for barring television cameras in a hearing on November ballot measures. The legislator said he acted “out of concern the hearing would provide fodder for political ads.” In an open apology before reporters, Steinberg told them “It wasn’t right and won’t happen again as long as I am here.”

The situation has all the marks of a political action. Steinberg supports Proposition 30, a measure to increase taxes. Individuals opposed to the measure were expected to testify. An opponent of the proposition, Senator Lois Wolk, was shocked to learn the hearings were not going to be televised. As chair of the Senate Governance and Finance Committee, she said the decision was made without prior notice or her approval.

“I strongly disagree with the decision, as the hearing was held to fulfill a state-mandated discussion on the initiatives so as to inform the public.” An audio was available over the Internet, but the purpose and rule of the laws are to provide the greatest access and transparency available.

That either side would sidestep that mandate because of a fear that excerpts might be used in campaign commercials is a sad commentary on the state of elective politics.

In an effort to make it easier for newcomers to have a chance to win in the upcoming election, the taxpayers of San Francisco are financing qualifying candidates.

The program is administered by the city’s Ethics Commission, and allows challengers for a seat on the board of supervisors to receive a maximum of $155,000; incumbents have a cap of $152,500. More than $4 million is available in the account, according to John St. Croix, executive director of the commission. A payment of $248,867 was made Friday to five candidates who have qualified.

In order to be eligible, says St. Croix, the individual “must demonstrate that he or she has received at least $10,000 in qualifying contributions from at least 100 individuals who reside in the city.” The threshold for incumbents is slightly different: they must raise $15,000 in qualifying contributions from at least 150 residents.

A base grant of $20,000 is granted once the candidate qualifies, with additional amounts given based on the results of private fundraising.

Discussion questions:

• With cities and counties facing bankruptcy, does public financing of campaigns make economic sense?
• Do you support public financing of political campaigns? Why or why not?
• Should there be an “ethics clause” that requires the public money be returned if the candidate engages in negative campaigning?
• Should the money be returned in the case of campaign ethics violations?

If you can’t trust the U.S Justice Department (DOJ) to know the difference between right and wrong, whom can you trust?

The agency’s inspector general said, “high-level officials in the Justice Management Division, or DMJ, violated the federal nepotism statute for advocating for the appointment of their own relatives to positions in the Justice Department.” In one case, “two senior officials simultaneously attempted to assist each other’s relative in securing DOJ employment.”

Unfortunately, this most recent revelation is the third in the past eight years. Jobs included clerkships and internships, with salaries ranging from $27,000 to $40,000.

A spokeswoman for the attorney general states “this kind of behavior will not be tolerated, and the department must maintain a zero tolerance policy and swift and decisive action must be taken to deal with those involved in these activities.

Nepotism such as the type uncovered at the Justice Department is illegal. To learn more about why nepotism in government presents a serious ethical problem, visit the Ethic's Center website.

Discussion questions:

1. Helping a friend or family member find a summer or permanent job is commonplace in the sector. Why is the standard different in the public sector?

2. Should elected officials who assist in securing jobs for family members be required to disclose their actions?

3. Does an appointed municipal employee have an obligation to disclose that he or she was instrumental in hiring a family member?

Post your responses in the comment section of this blog.

In the wake of cities declaring bankruptcy, Baltimore’s “audit bill” seems like a no-brainer.

A watered-down version of the bill would require 14 city agencies to be audited at least once every four years. According to the Baltimore Sun, the original bill called for audits of all 55 city agencies every two years. If all goes well, the council will approve putting the proposal on the November ballot.

Councilman Brandon Scott, who is just 28 years old, noted that some agencies have not been audited in his lifetime. “We are a budget built on sand,” according to fellow councilmember Mary Pat Clarke.

The move toward more accountability came from a series of bills introduced by Councilman Bill Henry, who is seeking to streamline the council, reduce the power of the mayor, and impose term limits. While laudable, those reforms do not make the top of the list, nor should they become a roadblock for better fiscal oversight.

Financial audits cannot not be an option for any organization, let alone those who rely on tax dollars. Transparency in government must extend past open meetings, conflict-of-interest disclosures, and access to public records. Best practices dictate complete and regular audits of cities and their internal agencies.

Few people discussing rising health care costs are aware of the millions of dollars that are spent each year by health care districts—agencies supported by public funds. But a statewide investigation by The Bay Citizen shows apparent conflicts of interest between some board members and the firms they deal with, and the sums are staggering.

“In March, the California State Auditor found that the Salinas Valley Memorial Healthcare System had paid $21.6 million between 2006 and 2010 to businesses in which board members or executives had a financial stake.” The charges are under subject to investigation by both the Monterey County district attorney and the California Fair Political Practices Commission (FPPC).

Conflicts of interest are one of the most serious of the legal and ethical problems facing public officials and their agencies. It is critical that all special agency board members, executives, and their legal representatives follow the law. But they also must remember that the perception of wrongdoing is as damaging to public confidence as an illegal vote.

There is a stigma about declaring personal bankruptcy, but it does not compare with the reputation that comes to a city that goes bankrupt. Ask the mayor of San Bernardino, the latest California city to file for Chapter 9 bankruptcy protection. As of this week, the city of 211,000 found it had just $150,000 in the bank. According to the Los Angeles Times, “The city barely scraped together enough money to cover its June payroll.”

Uncertain economic times are impacting local government to a degree that we have not seen in the past. Vallejo, a Bay Area city, declared bankruptcy in May 2008; Stockton did the same last month. Cities large and small are vulnerable. Earlier this month Mammoth Lakes, a resort town of 7,392 filed bankruptcy papers, in part because they could not pay a $43 million court judgment.

While costs of providing city services and employee benefits have skyrocketed, the slow economy and decline in real estate values have contributed to the $45 million shortfall in San Bernardino.

An “exit route” would not be possible without recent state legislation that changed bankruptcy law. The move was prompted by the 1994 bankruptcy of Orange County, the largest county in the United States to go bankrupt.

The results of declaring bankruptcy  include drastic reductions in police and fire protection, layoffs, and severe cuts in basic services such as parks, libraries, and road repairs. While it is easy to blame the financial problems on the pension programs (many are unfunded or underfunded), there is no benefit at this point to place the blame on any one factor. In some cases, the loss of redevelopment funds and the inability to pay off bonds are determining factors. And because any tax increases must be passed by the voters (one provision of Proposition 13), cites are unable to keep revenues in line with expenditures.

Is this the tip of the bankruptcy iceberg? Michael Coleman, a fiscal advisor for the League of California Cities admits there may be more cities facing this option in the future, but predicts some will able to weather the storm. As for the others, Coleman says. “Some cities may not go into bankruptcy, but they may dissolve. They may cease to exist.”

Discussion questions:

• Should cities have the right to declare bankruptcy?
• The law dictates how creditors are to be treated. What ethical obligation do cities have to their employees in times of fiscal collapse?

The job-training program for ex-offenders was intended to teach upholstering skills that could mean future employment. But a story in the Louisville Courier-Journal reveals that the councilwoman overseeing the program for the past five years may be the biggest beneficiary.

“Records provide no evidence that any ex-offenders attended the upholstery-training program, on which more than $30,000 of city tax dollars was spent between March 2007 and November 2011,” according to the paper.

The corrections director, who described the program as “goofy” said his department was never asked to refer ex-offenders to the program. Mayor Greg Fischer shut it down, describing it as “an inappropriate use of taxpayer money.”

Record keeping was sporadic, and Councilwoman Barbara Shanklin initially denied participating. She later admitted she and her son upholstered their own couches in the program. And while the program was established to provide trade skills for ex-offenders, two community participants said they were told the class was open to the public.

The lack of accountability presents legal and ethical problems. Linda Haywood, the instructor, was a long-time personal friend of Shanklin, and was paid $100 per class. When sign-in sheets were finally required, they showed 91 classes had been held, and that 80 were attended by a single person. The councilwoman’s name showed up 15 times, and her son signed in for 23 classes, where he was the sole student. Other family members also took advantage of the classes.

At the very least, programs funded with tax dollars must have a clear mission, keep accurate records, meet goals, and be transparent to the government and the public.

The city of Plantation, Florida will reimburse the mayor more than $63,000 in legal fees she spent in defending ethics and criminal allegations filed by a political rival.

The Florida Commission on Ethics dismissed the charges brought forward by Warren Meddoff, who is now required to pay more than $52,000 for his part. Although Meddoff admitted he did no have any direct evidence of ethics violations by the mayor, he said city employees  told him that she was campaigning at city hall, and thus misusing her position. His complaint also accused her of violating the Sunshine Law, requiring elected officials to conduct public business in the open. The State Attorney’s Office dismissed that as well.

An administrative judge ruled that “Meddoff acted with a malicious intent” to injure the mayor’s reputation. “Cities have an obligation to pay costs of elected officials when allegations are made with reckless regard to the truth,” according to city attorney Donald Lunny.

The city’s insurance carrier has paid $25,000, and if the mayor collects any money from Meddoff she will reimburse the city.

Discussion questions:

• Should the city pay the legal fees?

• Would it make a difference if the charges against the mayor were not made by a political rival, but by a citizen with no political agenda?

• How might the council handle a similar situation in the future?

• Is it possible this action will discourage legitimate whistleblowers from coming forward with complaints about elected officials?

Post your comments here.

Do you have a correctional facility in your community? Ever wonder what goes on behind the barbed wire and concrete walls?

You might be surprised to learn that many of the challenges mayors and public administrators face are exactly the same as the ones faced by those who are in charge of our jails, prisons, detention, and rehabilitation centers.

In addressing a class of executives, wardens, and other high-level employees of local, state, and federal facilities, I realized the general public has little knowledge of the workings of these institutions and of the everyday challenges employees face.

My workshop for the Executive Excellence track of the National Institute of Corrections included a background on the Markkula Center’s Framework for Ethical Decision Making, as well as background on how to create a culture of ethics in an organization.

We know that corruption in government captures headlines. For example, the grand jury in Mason County, West Virginia, recently indicted former sheriff David Anthony on 42 counts, including fraud, embezzlement, and unauthorized use of a government purchasing card. He was sentenced to 18 months in jail, and until his “no contest” plea had planned to run for re-election. His sentence was slightly delayed because the judge also required him to write a letter of apology to the public and his employees.

What impact does this story and others like it have on correctional facilities? Plenty. In discussing the importance of ethics and creating and maintaining a culture of ethics, the participants' concerns mirrored those of other public servants.

Ethical lapses create the following problems:

• Loss of public trust. One incident can lead to a series of stories that create the impression of widespread corruption.

• Low morale. The actions of only a few can cause all employees to face embarrassment or loss of productivity.

• Closure of facilities or cuts in funding. The legislature may take punitive action against a facility in response to problems in a facility, even if those problems are being addressed

. • Difficulty in hiring personnel. Public service is important and rewarding work, but if a correctional facility is facing an investigation or employees are under indictment, recruiting good employees can be nearly impossible.

Balancing the need to take care of the facility as well as develop positive relationships with government leaders and the community was a common theme in our discussions.

While correctional facilities are good for the local economy, they are not always appreciated for the difficult, but necessary role they play in our society.

Bonds are an essential part of raising money for local government and school districts. But what few people know is that major financial institutions in California are regular contributors to school bond elections – and then are selected to handle the transactions.

According to a report by California Watch, “ underwriters gave 155 political contributions since 2007 to successful bond campaigns for school construction and repairs.” “If this isn’t proof of pay to play, then pay to play doesn’t exist,” says Glenn Byers, assistant treasurer of Los Angeles County.

Although he does not handle the hiring of the underwriters, Byers is knowledgeable of the process. “The timing of the payment is irrelevant. You paid and you got the job. That’s pay to play.”

The practice is banned in some states, but in California, major underwriters are regular contributors, and “overwhelmingly, bond underwriters who donated to these campaigns were granted contracts by the school districts.” The study shows that underwriters usually are contracted by the districts before the election, and then give money to help support the actual political campaign.

At least one firm, O’Connor & Co. Securities does not donate. “As a firm policy, we avoid participation in campaign contributions solely to avoid the appearance of a conflict of interest, even though at times this could put us at a competitive disadvantage,” according to President Will O’Connor.

The Municipal Securities Rulemaking Board is now requiring underwriters to “report bond measure donations to the self-regulatory agency. The board is analyzing the data reported so far (since 2010) before determining whether additional regulations are necessary.”

The ambulance business is big business, and local government agencies are charged with securing contracts for such service. Because the stakes are so high, there is a need for absolute transparency in the awarding of these lucrative contracts, and any other contracts related to the providers.

But full disclosure was not the way the Tulsa and Oklahoma City agency, known as EMSA, handled business. A story in the Tulsa World reports that for more than 20 years a law firm had a no-bid contract to provide legal and collections service. To make matters worse, the daughter of EMSA chief executive officer worked for that law firm. Steve Williamson, CEO, says he doesn’t believe it is a conflict of interest, to “negotiate and sign government contracts with his daughter’s employer.”

The paper quotes him as saying it might look like a conflict, “when you put it like that.” His daughter is a payroll clerk, a job Williamson said he didn’t believe would apply to the city’s ethics policy.

Michael Slankard, who is with the city’s ethics commission said that although the policy is written for board members, it was intended to cover the CEO. “If the citizens of Tulsa reasonably expect that there’s a conflict, well that’s enough. It doesn’t have to be a conflict, just the appearance of one.”

State versus local government. It’s a battle waged across the country, but as an editorial in the Baltimore Sun suggests, it’s sometimes important for the state to take the lead, “where the interests of the state as a whole need to be factored into the mix, and where local governments need to be held more accountable, not less”

The paper cites education, land and water use, and building codes as some of the areas where Maryland residents could use the assistance of the State House. It also calls out the need for “bolstering minimum ethics standards” as one area where the state lawmakers are justified in their intervention.

Acknowledging that the state’s involvement is often problematic, the paper emphasizes that “local governments must recognize when broader issues of public interest are at stake.”

As a former mayor who strongly supports local control, I usually weigh in on the side of the cities. But I agree that using state government as a scapegoat is unnecessary. “Not every mandate is an unwarranted intrusion.”

Spring officially begins today, but spring fever began early for some cities that own ballparks. So while much discussion is focused on how free Superbowl tickets are distributed, an equally important question can be asked about baseball: Who is entitled to free access to ballpark suites?

In Arizona cities like Scottsdale, Phoenix, and Tempe, there is no policy regarding use of the taxpayer-paid suites. The cities of Goodyear and Glendale are the only two of eight cities with a formal policy regarding the use of the suites, used for watching spring training of major league baseball teams.

Economic development is the reason some cities cite as the reason to invite business owners to use the suites. Scottsdale’s economic developer says box or suite seating rank “in the top 5 tools that a city could use to attract businesses.”

This one-on-one with elected officials can leave the impression that city business is being discussed outside the appropriate public forums. According to Maria Laughner, manager of Peoria’s business and real estate development, having guests allows “for a relaxed and neutral environment in which to meet and talk about projects.”

A lack of reporting on the use of the suites creates a disturbing lack of transparency. And while Glendale documents the economic development benefits by disclosing those who attend the ball games, they keep those records for only one year.

In addition to elected officials and business leaders, churches and non-profit organizations also benefit from free tickets. But with no guidelines for who does or doesn’t get prime seats, it will continue to look like a “perk.”

While elected officials garner most of the headlines – good and bad—there is another important “player” in government: the public manager.

I was reminded of this last week when I had the privilege of addressing a group of graduate students at UCLA’s School of Public Affairs. The class included a few mid-career students as well as those who came to the program directly from their undergraduate institution.

Engaging with the students was the brainchild of their professor, Michael Dukakis, who is a visiting professor of political science. His class, “Bureaucracy and Public Management” is designed to look at leadership, especially “public management in the tough, day-to-day world of politics and intensive public scrutiny.”

Dukakis, a three-term governor of Massachusetts, began his public service as an elected town meeting member, then served in the state legislature before running for governor. He also was on the faculty of the Kennedy School of Government at Harvard (KSG), which is where I met him. Serving as the 1988 Democratic nominee for president required him to leave KSG, but he still uses many of their case studies in his classes.

His syllabus includes “Politician as Outsider: Judy Nadler and the Santa Clara City Council (www.hks.harvard.edu/case/caseweb/abstracts/89915.htm). This case describes an ethical dilemma I faced early in my city council career, and provides facts and circumstances that impact the city council, city manager, staff, the media, and the public. The discussion was rich, and it was exciting for me to see this group of bright students debate and hypothesize about the case.

A record number of public managers are retiring, and this and other classes like it serve as important gateways to public service. The experience is made all the better when someone like Michael Dukakis shares his wisdom, and invites, as he put it, “the woman behind the case” to join his class for this session.

Tweet, post to Facebook, or call your favorite political reporter.

This is the way consultants who specialize in "opposition research" are shaping the tenor and tone of the current campaigns.

There is hardly a reason to call a source for a story about a candidate. The Twitter postings are a non-stop supply of truth and lies, each writer hoping to find the snippet incorporated in a news story or broadcast -- or retweeted.

I recently heard a disturbing observation from a journalist who has covered politics for many years. "Opposition researchers have replaced investigative reporters."

For all our sakes, I hope that is not true.