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Her Honor

Judy Nadler, senior fellow in government ethics at the Markkula Center for Applied Ethics, looks at ethical dilemmas, scandals, and best practices in government.

  •  Audits Are Critical To Government Transparency

    Tuesday, Jul. 17, 2012

    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.

  •  Healthcare Districts Must Follow Letter and Spirit Of The Law

    Monday, Jul. 16, 2012

    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.

  •  Bankrupt Cities Face Ethical Issues

    Thursday, Jul. 12, 2012

    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?
  •  Private Projects Should Not Benefit From Public Dollars

    Tuesday, Jun. 12, 2012

    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.

  •  Should Taxpayers Shoulder Burden For Legal Fees of Officeholders?

    Thursday, May. 31, 2012

    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.

  •  Corrections Leaders Face Same Ethical Challenges As Other Public Servants

    Tuesday, May. 29, 2012

    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.

  •  Pay To Play In School Bond Elections?

    Thursday, May. 3, 2012

    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.”

  •  Conflict Of Interest Or Nepotism -- Or Both?

    Tuesday, Apr. 3, 2012

    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.”

  •  Tension Between State And Local Government May Stifle Good Policies

    Monday, Apr. 2, 2012

    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.”

  •  Baseball Fantasy: Free Suite During Spring Training

    Tuesday, Mar. 20, 2012

    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.”

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