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San Francisco Ethics Commission
grossly underfunded by design?

Rules Committee hearing to review problem

By Joe Lynn

March 14, 2007

Politicians can sign all manner of fabulous programs into law. They can even take credit for doing so. But finding funding for them is an entirely different matter.

Take George W. Bush, for example. He signed the building of a wall between the U.S. and Mexico. He created the No Child Left Behind program. But the wall isn't being built and education hasn't been improved, at least in part because these programs weren't funded.

Tomorrow, the Rules Committee holds a hearing at City Hall, Room 263,on whether the Ethics Commission is adequately funded to discharge its duties. Although a Civil Grand Jury reported two years ago that the Commission was grossly underfunded, the Mayor has added only minimal resources since.

The following is a list of needs that have not been funded:

1. Staffing needed

The Commission itself estimated a need for 27 FTE's (Full Time Equivalent) exclusive of the new Mayoral Public Finance Program. It now has around 14. What follows is a review of the laws entrusted to the Commission. It will show how the Mayor is giving lip service to the laws rather than any endorsement of good government.

2. Sunshine Ordinance

Ethics is the only agency charged with enforcement power for the Sunshine Ordinance. These are the laws that allow full public participation in meetings and review of documents generated by our bureaucracy.

Ethics has never enforced these laws.

Sunshine has reached a breaking point in the City. Bureaucrats balk and get citations against them from the Sunshine Ordinance Task Force, but Ethics does nothing. Someone needs to do a management audit of the City to bring its business practices into line with transparency.

The City Attorney claims that he has spent hundreds of thousands of dollars on problems like metadata, problems that could be resolved by city attorneys not putting privileged advice into the metadata of the electronic documents. Simple changes to the City's business practices can resolve most of the issues encountered here, but Ethics doesn't have anyone on staff to do that.

3. Statements of Economic Interests

Statements of Economic Interests (SEI) disclose possible financial conflicts that officials might have in the discharge of their duties. The Civil Grand Jury specifically singled out this program for criticism in its report of 2005. The Commission has never audited one SEI. There is no assurance to the public that we are receiving truthful disclosures.

What's more, many officials get away without filing any such disclosures at all. The problem is so bad with some departments that years go by without any disclosure while the officials continue to hear cases on which there may be a conflict. In one case, a citizen filed a complaint concerning the Rent Board with the FPPC bypassing Ethics purposefully because it is underfunded. He has no confidence in the impartiality of decisions by that important agency.

Thousands of City Employees are required to file SEI's, but Ethics only checks with their department heads who file self-serving reports overstating compliance. Last year, one citizen went to the School Board to check employee SEI's, all filed according to Superintendent Ackerman's statement under oath. Despite several visits, the agency could not produce to him one of the dozens of reports supposedly on file.

4. Lobbyist Regulation

Lobbyists thrive in direct relationship to the amount of dollars government can distribute. San Francisco and Los Angeles have roughly equivalent budgets, but Los Angeles has four times the lobbyists registered here.

San Francisco has seven times the budget of San Diego's but they have twice as many lobbyists registered. What gives?

Don't expect an answer from Ethics. They aren't funded to get an answer. Business interests complain that the unions don't file. Incomplete lobbyist information is posted to the web to save money. The names of the lobbyists don't appear on the web.

We know, for example, that Barbary Coast is duly registered, but what are their names? What do they look like? There is no transparency or enforcement in this law.

Additionally, the law requires periodic training in the lobbyist law for the public and the regulated community, but none is given.

5. Campaign Consultant Regulation

Campaign Consultants are required to register and file reports with the Commission. Yet campaign consultant reports show a strange development. Amounts reported paid to campaign consultants HAVE steadily dropped since the high in 2000 of $4,385,648. In 2002, that became $3,243,997. In 2004, $943,213. In 2006, only $617,275 was reported. What gives? Ethics won't tell you because they aren't funded for such investigations. Jim Sutton, one of the biggest names in campaign circles, is not a registered campaign consultant even though he writes copy for campaign ads -- definitely not an attorney's function. The only folks Ethics has pursued have been smaller filers.

6. Campaign Finance Regulation

Last year's campaign for Supervisor in District 6 showed how our expenditure ceiling needs proactive policing in order not to be abused. Big money interests concealed spending so that Chris Daly would be hamstrung by his promise to honor the expenditure ceiling.

Had savvy campaign folks not put together an overwhelming case, the expenditure ceiling might not have been lifted until hit pieces against Daly had taken a fatal toll.

The same thing happened to Jeff Adachi in 2001, except the ceiling was not lifted then.

In 2003, Kamala Harris claimed to have broken the ceiling in September. A straight-line projection of expenditures showed she exceeded it around Aug. 4. It would have also found that she was understating her expenditures by about $30,000 as she herself admitted in a post election amendment.

Ethics should not have lifted this ceiling. At the time, Ethics did not even attempt a modest audit of about 70 expenditures in her report. The fairness of an election was subordinate to budget conditions at Ethics. If the law had been enforced and Harris held to her promise to honor the spending limit, the outcome of the election would have been different. Instead, she was allowed to spend additional money in the hundreds of thousands of dollars. Do we have confidence that Ethics can proactively police this Mayoral campaign?

A few weeks ago, John St. Croix, the Executive Director of the Ethics Commission, estimated a need for twice the enforcement staff he has been given. He also needs much more experienced investigators. The investigators are recent law school graduates with minimal, if any, litigation experience.

Big problems are beyond their reach. Compare Mayor Newsom's $600,000 of accrued debt from the 2003 election with Schwarzenegger's statewide accrued debt of $400,000 on his special election ballot measures. Newsom took three years to retire this accrued debt.

State law requires reporting accrued debt as a contribution, subject to the $500 contribution limits, when it becomes due and uncollected for a commercially unreasonable time. In contrast, Schwarzenegger had retired his debt within a year of the election.

How many vendors would give another candidate that break? Do folks who buy signs normally purchase on three years credit?

The law needs a sophisticated analysis. This is not unusual for white-collar crimes. But Ethics is unprepared for that. Instead, it specializes in going after small filers for late fines: It's also easier to go after the folks without the resources to push back.

Frankly, Ethics needs what I call an "H&R Block" unit by which small filers (campaigns under $75,000) can bring their checks and deposit slips to Ethics for help in filling out Campaign reports. The City needs to recognize that these laws are onerous and reach out to these guys so that political support remains for regulating big money, the regulation most needed.

7. Audits of campaign finance and governmental ethics

Any campaign that reports more than 1000 pages should be audited. Campaign reports of a certain size are not transparent. Audits would make them transparent. Mayor Newsom's reports are thousands of pages long. The only assurance that we can give the public of compliance with the law in these reports is through an audit.

Even though Mayor Newsom raised hundreds of thousands of dollars in 2004, 2005, and 2006, those reports weren't eligible for audit unlike most of the other committees.

Why? Lack of funding.

Who sets the funding for the Commission? Mayor Newsom.

8. Enforcement

Right now, Ethics enforcement of the laws is complaint driven. Someone spots a violation of the law, brings it to Ethics staff, and they investigate. But this is sporadic enforcement at best: it takes a professional to recognize a possible breach of the law. That means big money interests - the ones who can hire professionals - drive this department. Grass roots activists are the victims of this process.

We need to fund this division so that it can become proactive and take the time to spot violations of the law on its own.

9. Provide assistance to others in administering these laws

This is another Charter mandate for Ethics. However, in practice it is the City Attorney that provides folks with advice on the law even though the City Attorney is an elected official whose advice might be shaping the law in a self-serving manner. But Ethics isn't funded to handle all advice inquiries. Supervisor Daly knows this. When he asked questions about a journalist's fundraiser some years ago, he was sent to the City Attorney.

We should fund Ethics so that it, rather than an elected official, can be responsible for advice on these laws.

10. Making legislative recommendations

Our good government laws are often on the cutting edge of practice. Some laws work; some don't. If we continue with the ones that don't work, the system will break down of its own weight. The folks who founded the Ethics Commission understood this and gave it a specific mandate to assess the effectiveness of the laws:

The commission shall report to the board of supervisors and mayor annually concerning the effectiveness of such laws. The commission shall transmit its first set of recommendations to the board of supervisors and mayor no later than July 1, 1995.

Twelve years later, the Commission still has not issued such a report. No funding. As a result, resentment builds against the laws like the Sunshine Ordinance that need repair. It's hard to explain to the balking bureaucrats that they should be expressing their anger to the budget authorities that have failed us.

The public should not have to rely on reporters or citizens to develop the data by which we can assess the laws. For example, it should have been Ethics rather than an activist who first reported the figures above revealing trends in campaign consultant and lobbyist reporting. Ethics should have a staffer doing that kind of work.

11. The Whistleblower Hotline

Ethics punted this one to the Controller in 2003's Prop C (City Service Auditor). The Controller's starting budget was $10 million, more than 30 times what Ethics had been given for the program!

12. Statements of Incompatible Activities (SIA)

Prop E in 2003 set up the system by which each department tells its employees what kind of activities they should be wary of for breaching their duty of loyalty arising from their City employment. Ethics staff made a whopper of a mistake here telling the Controller that this program would have no budget impact on the Commission. Swamped by the 2003 crisis in the District Attorney race, staff didn't even include their budget officer in considering the budget impact.

Ethics is already four years behind schedule right now in implementing this program. Every month, the Commissioners set aside a half hour or so to hear from City departments. It is a major drain on Ethics resources, and Ethics hasn't gotten a penny to do the work.

Debra Walker, the Chair at the Building Inspection Commission, set up my model here. She had Ethics hire (at DBI expense) a staffer to work at DBI and absorb that department's culture so that their SIA has grounding in the real world. As a result, major changes have already been made to the SIA originally approved by Ethics staff.

These rules govern inspectors' self-dealing in properties inspected by the City. That model should be followed in all major departments if we want to do more than give lip service to limiting employee self-dealing. The staff at Ethics just doesn't have the business expertise to spot needed Ethics reforms in City departments. Right now, the SIA's are mainly concerned with employees using City printers and computers, taking inconvenient time off, etc. The SIA's are not addressing much more critical questions, such as the Mayor's permitting fundraisers to serve on his staff.

13. Creation of appropriate forms

The biggest problem with Ethics forms is that they don't require reports to be transparent. For example, a committee making candidate independent expenditures is limited to $500 contributions unless it meets certain tests. We don't require the committees with contributions over $500 to report the test they are relying on and the facts that allow them to do so. If we could fund a staffer on this project, enforcement of the law would be transparent. That would save the City thousands of dollars in overseeing our laws.

14. Educational programs

More needs to be done to train reporters and activists in how to research the data on file. Training in Sunshine is given to the City Attorney, the agency tasked with preserving City secrets, in conflict with the bureaucrats' duty to render their data transparent.

15. To hold annual seminars for top official

I've never heard of such seminars. They should be open to the public.

Why Are We Fooling the Public into Thinking the Laws on Our Book Mean Something?

Unfortunately, no funding is worse than no law. If the Ethics Commission is not funded to do its work, we might be better off not having these laws on the books. At least when there is no law on the books, there is no danger the public will think the problem has been addressed.

The Board of Supervisors is to be commended for renewing this dialogue again. The last time there was public discussion of Ethics funding was in 2005 when Prop C was unsuccessfully proposed to give Ethics the power to propose its own budget. It was defeated because the Mayor argued that he would fix the problem. He hasn't done so.

Joe Lynn was the campaign finance and budget officer of the San Francisco Ethics Commission from 1998 to 2003. From 2003 to 2006, he served as one of the five Ethics Commissioners. The San Francisco Examiner called him “the backbone of the Ethics Commission.” While on staff, he received numerous awards and has been a speaker at many conferences on Good Government. He maintains an active interest in good government laws. Email Joe at joelynn114@hotmail.com


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