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CC 2017-10-30 PP Special Meeting_Ethics Training Ethics Training AB 1234 October 30, 2017 1 ETHICS TRAINING AB 1234 Came into effect January 1, 2006 Applies to elected officials and officers who receive compensation or expense reimbursement. Local agencies can require other agency officials or employees to attend as well. 2 ETHICS TRAINING AB 1234 AB 1234 requires two hours of training every two years Sign-in sheet Certificate of Completion 3 ETHICS TRAINING Goals of this Session Familiarize you with laws that govern your public service and alert you to know when to ask questions. Breadth vs. depth Encourage you to think beyond legal restrictions and provide tools for doing so. Achieve compliance with AB 1234 4 ETHICS TRAINING Principles of Public Service Public Servant: Public’s interest Public good Public’s trust Perception as important as reality 5 ETHICS TRAINING Importance of Public Perception 6 ETHICS TRAINING Public Perception Process First Step: Figure out what is the “the right thing” to do. Second Step: Figure out what the public’s perception of “the right thing” to do would be. Third Step: When needed, balance the first two steps and follow the path which best supports public service values. 7 ETHICS TRAINING Principles of Public Service Ethical Values Fairness Trustworthiness Responsibility Respect Compassion Loyalty 8 ETHICS TRAINING Would Mother Approve? 9 ETHICS TRAINING Principles of Public Service Ethics vs. Ethics Laws: Ethics = what we ought to do Ethics Laws = what we must do 10 ETHICS TRAINING Ethics Laws 11 ETHICS TRAINING Types of Ethics Laws Four categories of ethics laws: Personal financial gain Personal advantages and “perks” Government transparency Fair process 12 ETHICS TRAINING Ethics Laws PERSONAL FINANCIAL GAIN 13 ETHICS TRAINING Personal Financial Gain Public servants should not benefit financially from their position 14 ETHICS TRAINING Personal Financial Gain Types of prohibitions against personal financial gain: GRAFT Prohibition against self-dealing Employment related restrictions 15 ETHICS TRAINING Receiving Special Favors or Money for Official Actions Bribery Extortion 16 ETHICS TRAINING Bribery Public officials may not solicit, receive or agree to receive a benefit in exchange for their official actions. Bribery is a crime 17 ETHICS TRAINING Extortion Obtaining property of another induced by the use of actual or threatened force, violence, fear, or under the color of official right. 18 ETHICS TRAINING Consequences Jail time Restitution/fine Forfeiture of office or employment Forever disqualified from holding any office, employment, or appointment by any public agency in California 19 ETHICS TRAINING The Political Reform Act (“PRA”) Adopted by the voters in June 1974 Gov’t. Code Section 81000 et seq.; voluminous regulations have followed. Fair Political Practices Commission administers the Act FPPC staff provides a “help line” 1-866-ASK-FPPC advice@fppc.ca.gov Informal and formal written advice Only formal advice insulates one from liability 20 ETHICS TRAINING The Political Reform Act (“PRA”) Annual Statements of Economic Interest You may have a conflict even if it’s not on your Statement of Economic Interest 21 ETHICS TRAINING Disqualification Disqualification based on economic interests under the Act A public official may not make, participate in, or in any way influence a governmental decision when he or she has a disqualifying interest. 22 ETHICS TRAINING General Theme Public officials have a disqualifying financial interest if the decision will have a reasonably foreseeable material financial effect, on the official or his or her immediate family, which is distinguishable from the effect on the public generally. The PRA does not prevent you from having or “acquiring” a financial interest that may create a conflict. Not necessary to show actual “bias.” The rules are not necessarily logical or intuitive! 23 ETHICS TRAINING The Political Reform Act (“PRA”) Previously an eight-step process was set up to determine whether an official had a conflict of interest under the Act. Recent amendments simplified it to a four-step process. 24 ETHICS TRAINING The Political Reform Act (“PRA”) Preliminary analysis: Is the individual a public official? 25 ETHICS TRAINING The Political Reform Act (“PRA”) Step 1 Is it reasonably foreseeable that the governmental decision will have a financial effect on any of the public officials’ financial interests? Five types of financial interests: Business investment, employment, or management Real property Sources of income Sources of gifts Personal finances 26 ETHICS TRAINING The Political Reform Act (“PRA”) Step 1 (Continued) Is the financial interest “explicitly involved”? Financial interest “explicitly involved” Financial interest “not explicitly involved” 27 ETHICS TRAINING The Political Reform Act (“PRA”) Step 2 Will the reasonably foreseeable financial effect be material? *End of 2014 – Revisions to real property materiality standards 28 ETHICS TRAINING The Political Reform Act (“PRA”) Step 3 Can the public official demonstrate that the material financial effect on the public official’s financial interest is indistinguishable from its effect on the public generally? 29 ETHICS TRAINING The Political Reform Act (“PRA”) Step 4 A public official with a disqualifying conflict of interest may not make, participate in making, or in any way attempt to use his or her official position to influence the decision. Procedures to disqualify oneself: At the meeting, publicly identify the financial interest or potential conflict of interest in sufficient detail to be understood by the public. Step down and leave the room. Exceptions 30 ETHICS TRAINING The Political Reform Act (“PRA”) Exception to disqualification Despite a disqualifying conflict of interest, in rare instances a public official’s participation may be legally required 31 ETHICS TRAINING Conflict of Interest Summary Learn to spot potential conflicts early Understand the big picture of the rules Realize the importance of the facts Contact your legal counsel or the FPPC as early as possible 32 ETHICS TRAINING Good Ethics = Good Politics When in doubt, sit the decision out. 33 ETHICS TRAINING Consequences Criminal Civil Jail Fines Impact on decision 34 ETHICS TRAINING Would mother approve? 35 ETHICS TRAINING Interests in Agency Contracts Barred Government Code Section 1090 A public official may not have a financial interest in any contract made by his or her agency. Making a contract No disqualification allowed 36 ETHICS TRAINING “Perks” 37 ETHICS TRAINING “Perks” No special privileges for public officials Two types of perks: Perks offered to you Perks you give yourself 38 ETHICS TRAINING “Perks” Types of “Perks” include but are not limited to: Gifts Compensation Use of public resources 39 ETHICS TRAINING “Perks” What is considered a gift? Anything you might receive that you did not pay for or provide equal or greater value for. Discounts and rebates not provided to the general public. 40 ETHICS TRAINING “Perks” – Gifts Gift Limit $470 from a single source during the course of one calendar year (effective 01/01/2017). Statement of Economic Interests: withdrawal $50 or more over the course of one calendar year. 41 ETHICS TRAINING “Perks” – Gifts What can I do with unwanted gifts? Return the gift unused to donor within 30 days Deliver to a non-profit within 30 days 42 ETHICS TRAINING Exceptions to Gift Restrictions Gifts from relatives Gifts of hospitality in donors house when donor is present Gifts of equal value exchanged on holidays and birthdays Informational material Inheritance Personalized plaques and trophies 43 ETHICS TRAINING Honoraria Ban Elected officials, city managers, city attorneys, city treasurers, and other public officials who manage public investments. May not accept any payment for giving a speech, publishing an article, or attending a public or private conference, meeting, or like gathering. 44 ETHICS TRAINING Gifts of Public Funds Public agencies may not make a gift of public funds An expenditure is not a gift of public funds if it serves a public purpose, even if a private person incidentally benefits. 45 ETHICS TRAINING Travel Expenses Airline passes and discounts from transportation companies Specifically prohibited by Article XII, Section 7 of the California Constitution. 46 ETHICS TRAINING Expense and Reimbursement Issues Laws limiting public official compensation Laws limiting reimbursement of expenses to those that are actual and necessary 47 ETHICS TRAINING “Perks” Use of public resources: “No perks” also includes the use and misuse of public resources such as staff time, equipment, and supplies. 48 ETHICS TRAINING “Perks” Mass mailing restrictions: Mailing that consists of 200 substantially similar pieces of tangible mail in a calendar month Mailing features and elected official: Officer’s photograph or signature Singles out the officer 49 ETHICS TRAINING Revolving Door Prohibitions Prospective employment: A public official may not influence agency decisions when the interests of a prospective employer are at stake. The situation arises when an official is negotiating or has “any arrangement” concerning prospective employment with someone with business before the agency. 50 ETHICS TRAINING Revolving Door Prohibitions Post-employment: Once a local elected official or General Manager is no longer with their respective agency, they are prohibited from appearing before or communicating with the former agency for compensation in an attempt to influence matters before the public agency for one year after leaving their position. 51 ETHICS TRAINING Ethics Laws Government transparency 52 ETHICS TRAINING Transparency Laws Underlying principle is that public officials transact their business in public. 53 ETHICS TRAINING Transparency Laws Two general types of transparency laws: Activities of the individual official Government Processes 54 ETHICS TRAINING Transparency Laws Disclosure of Economic Interest (Form 700): Sources of income Interests in real property Investments Business positions Sources of gifts * Public Documents 55 ETHICS TRAINING Transparency Laws Non-disclosure Penalties: Violations can be prosecuted as a misdemeanor Removal from office Fines of $5,000 to $10,000 per offense Legal costs 56 ETHICS TRAINING Transparency Laws Charitable Fundraising: Rule applies to elected officials Solicitation of contributions for legislative, governmental, or charitable purpose of $5,000 or more from a single source Must file a report with Agency. 57 ETHICS TRAINING Transparency Laws Government Processes: The Ralph M. Brown Act Actions taken by a legislative body are taken openly and that their deliberations be conducted openly. 58 ETHICS TRAINING Transparency Laws Government Processes: Meetings Serial Meetings Daisy Chain Hub and Spoke 59 ETHICS TRAINING Computers and Email Don’t use: “Reply to All” 60 ETHICS TRAINING Transparency Laws Exceptions to public meeting requirements: Permissible Gatherings Closed Session Meetings 61 ETHICS TRAINING Transparency Laws Closed Session Conference with real property negotiators License/permit determination Conference with legal counsel Existing or anticipated litigation Threat to public services or facilities 62 ETHICS TRAINING Transparency Laws Closed Session (Continued) Public employment appointment and hiring Public employment employee evaluations Public employee discipline/dismissal/release Conference with labor negotiators Charge or complaint involving information protected by federal law 63 ETHICS TRAINING Transparency Laws Public’s right to participate: Notice and Agenda Regular and Special Meetings Availability of staff reports and information presented to the Council 64 ETHICS TRAINING Transparency Laws Public’s right to participate: (Continued) Public Participation Minutes Public official’s role 65 ETHICS TRAINING Transparency Laws New for 2017: oral report of recommendation for a final action on a compensation to a: General Manager Department Head Person whose position is held by an employment contract within the agency. 66 ETHICS TRAINING Transparency Laws Public Records Act Requires public agencies to provide the public the opportunity to inspect and receive copies of public records. Public records include any writing containing information related to the conduct of the city’s business. A public record may be in any physical form (paper, microfilm, electronic, etc.) Certain records are exempt from disclosure Public records on personal devices and accounts (San Jose case) 67 ETHICS TRAINING Fair Process Laws Right to fair and unbiased decision-makers Under the common law doctrine, an elected official has a fiduciary duty to exercise the powers of office for the benefit of the public and is not permitted to use those powers for the benefit of private interests. 68 ETHICS TRAINING Fair Process Laws Due Process Applies to “quasi judicial” matters Procedural due process requires: Notice and opportunity to be heard Fair and impartial decision makers 69 ETHICS TRAINING Fair Process Laws Competitive Bidding Everyone has a right to compete for an agency’s business Each agency must have a procurement of goods and services policy Competition produces the best price for taxpayers Kickbacks are prosecutable under federal fraud and extortion laws 70 ETHICS TRAINING Fair Process Laws Incompatible Offices Prohibits a public official from holding two public offices at the same time if there exists a potential conflict or overlap in the functions and responsibilities of the two offices. 71 ETHICS TRAINING Campaign Contribution Issues Distinction between elected officials and appointed officials Appointed officials cannot participate in entitlement proceedings involving campaign contributors of more than $250 during the previous twelve months. 72 ETHICS TRAINING Conclusions and Best Practices 73 ETHICS TRAINING Conclusions and Best Practices Be aware Talk with your counsel early Avoid the temptation 74 ETHICS TRAINING Conclusions and Best Practices Develop a tracking system Know when to disqualify yourself Consider the consequences of your actions 75 ETHICS TRAINING Conclusions and Best Practices Assume all information is public or will become public Don’t discuss agency business with fellow public officials outside of meetings 76 ETHICS TRAINING Conclusions and Best Practices Decision-making questions to ask yourself: What decision, behavior or course of action will best promote the public’s trust in my leadership and that of my agency? Would I want to read about a certain course of action on the front page of my local newspaper? How do I want to be remembered as a public official? 77 ETHICS TRAINING AB 1234 Compliance Sign in Proof of Participation Certificate Provide to custodian of records as public record Hand-out from the Institute for Local Government 78 ETHICS TRAINING Questions and Comments 79