A California Recipe for Conflicts of Interest

Update below (August 19, 2009)
Here's a recipe for conflicts of interest. Create a new kind of county commission to hand out grant money. Require that commission members include representatives from public and private agencies that handle the very services the grants are intended for. Stir until frothy.

What's amazing is that, according to an article in today's Riverside (CA) Press-Enterprise, it has supposedly taken ten years for the stirring to go frothy.

The commissions are called First 5 Commissions, because they take a tax on tobacco and hand it out to agencies who service children under 5 (they were the creation of a California initiative drive, of course). Recently, a large grant (about half the commission's annual allotment) was given by the Riverside County First 5 Commission to the Riverside County Department of Mental Health. The commission chair just happens to be the director of that department, and of course he didn't vote. But two members whose agencies were subcontractors did vote, although they said they did not know about the conflict (which raises the question, Did they want to know?). Another commission member's department was listed as an unfunded partner in the grant.

The Family Service Association CEO, which did not get the grant, did what any under-5-year-old would do:  cry out (that is, appeal the decision) and point a finger. And what he pointed out with his finger was that the grant specifications were such that only the Mental Health Department qualified.

The John F. Kennedy Memorial Foundation also did not get the grant, but did not appeal, because it had candy in its pocket. Its director "said the commission's appearance of favoritism never has been a concern. Her agency previously has gotten First 5 money."

This is another case of balancing the need for expertise with the desire not to have ongoing conflicts of interest. The commission structure was designed to favor expertise. Handing out grants to commission members over non-commission members was considered to be acceptable, despite the appearance of a commission handing out money to its own members. It was considered so acceptable, that there does not appear to have been a requirement to determine which commission members' agencies benefited. Nor was there apparently any oversight procedures regarding specifications, the easiest part of the game to manipulate.

In 2005, the state required that all First 5 Commissions adopt conflict of interest rules. The San Diego commission did this, requiring interested members to recuse themselves, but going further with commission employees, requiring that they not participate in "any outside employment which will impair the employee's independence of judgment as to his/her Commission duties" or "any outside activity which will require or induce the employee to disclose confidential information acquired by the employee in the course of his/her Commission duties."

So is it okay for commission members to have impaired independence of judgment and to have access to and disclose confidential information?

The fact is that anyone on a commission handing out a limited sum of money to agencies that include one's own has an ongoing conflict of interest, and when this applies to several or all the members, the impression can only be of a club of people dividing up public money for their own use. This setup was not designed to instill public trust.

Update (August 19, 2009): According to an article on the sandiego6.com website, 9 of the 16 members of an advisory committee to the First 5 Commission of San Diego County resigned rather than prevent organizations that employ them from getting First 5 Commission grants.

Robert Wechsler
Director of Research-Retired, City Ethics

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