Guaranteeing an Ethics Commission's Budget

The dream of every ethics commission is to have a guaranteed budget. But it is not really a dream for two reasons. One, there are ethics commissions with guaranteed budgets. And two, it is a reasonable policy that can be countered only by a local legislative body's need for control. This blog post will look at the arguments for and against a guaranteed budget, as well as several examples of and approaches to guaranteeing budgets for ethics commissions and similar independent bodies and agencies.

The Arguments For and Against
Why is something so uncommon such a reasonable policy? Here's the argument made by the New York City Conflicts of Interest Board (COIB) in a June 2009 proposal:

[T]he COIB has no natural constituency and no source of revenue. Furthermore, it regulates the very people who set its budget. Indeed, invariably the Board has before it matters involving high-level officials at the same time those officials are passing on the Board's budget, an unseemly situation. Lack of a source of assured funding also significantly undercuts the perception of the Board‟s independence.

Or as a citizens group in Newburgh, NY argued in August 2010, the proposed ethics commission might be "investigating the very people whom they would ask for funding."

This issue is being argued this month in Cuyahoga County, OH (Cleveland), with respect to the newly appointed inspector general. According to two Cleveland Plain Dealer articles last week (1  2), the county executive and the council ethics committee chair want to give the IG's office a guaranteed budget floor, with a fixed formula, either a dollar amount or a percentage of the general fund. Most of the county council members "protested having their hands tied on funding, and brushed aside the argument that the inspector general needs budget independence to be impartial. They said [the IG] should go through the budget process like other county department heads."

One council member proposed a compromise:  a guarantee for most of the budget, which could be either a dollar amount or a percentage of the general fund, with the IG required to go before the council for some portion of the budget.

Having your hands tied on funding is hardly an argument; it's a feeling, a fear of loss of control. And the issue is not primarily about the IG's impartiality. It is about the appearance of impropriety of a council holding a watchdog's purse strings. And it is about the conflict that exists when an IG has to weigh his handling of a matter involving a council member, or a council staff member, against the preservation of his job, his subordinates' jobs, and the overall effectiveness of the IG's office. More concretely, if the IG has five investigations going on, does he devote sufficient resources to the one involving a council member, knowing that this might undermine the other investigations as well as future investigations?

How do you deal responsibly with this situation? You can't withdraw, you can't disclose. You need to come up with a creative solution. And that solution is a guaranteed budget. It solves the problem, with the bonus of increasing public trust in the IG program.

Examples of Guaranteed Budgets
The same holds true for ethics commissions. And there are actually councils and legislatures that have given them guaranteed budgets.

New Orleans has an IG office that, in conjunction with its Ethics Review Board, is assured of an amount not less than .75% of the General Fund operating budget, and its budget cannot be vetoed by the mayor (§9-401 of the Home Rule Charter).

Philadelphia has the following charter provision (§2-300(4)(e)):

For the first two fiscal years immediately following the effective date of this subsection, at least $1,000,000; and for all subsequent fiscal years, an amount adequate to enable the Board to perform the functions assigned to it by this charter, shall be appropriated for the work of the Board of Ethics. Should the Council fail to make an adequate appropriation to the Board of Ethics, the Board may petition any court of Common Pleas of Philadelphia County for a mandamus to the Council to perform its duty under this section.

This provision effectively creates a budget floor for the ethics board, and even though it doesn't expressly guarantee the equivalent amount each year, it provides sufficient evidence of what the board needs to operate for a court to order the council to give the board an equivalent amount.

An ordinance in San Diego guarantees its ethics commission a minimum staff of three named positions and a "reasonable budget" (San Diego Municipal Code Section 26.0411). The EC now has five staff members.

The Los Angeles City Charter requires an automatic annual appropriation of $2 million into a public financing trust fund, which is administered by the city's ethics commission.

NYC's COIB is seeking the same sort of guaranteed budget as the city's Independent Budget Office already has. The IBO's budget must be at least 10% of the budget of the Office of Management and Budget (Charter § 259(b)).

Just last month, the Alabama legislature approved a semi-guaranteed EC budget of .01% of the state’s general fund budget. It can only be modified by a 2/3 vote of the Alabama House and Senate.

California's Fair Political Practices Commission, its ethics commission (which has jurisdiction over local governments), has had a guaranteed budget since 1976, when it was appropriated $1 million and was guaranteed at least the same amount, adjusted for inflation. (Ca. Gov’t. Code Section 83122)

Oregon's ethics commission, which also has jurisdiction over local governments, has an unusual new setup. Starting with the last fiscal year, the EC assesses agencies, based on full-time equivalent staffing, as well as municipalities. I'm sure that EC isn't very popular.

Michigan's Civil Service Commission is guaranteed by the state constitution "a sum not less than one percent of the aggregate payroll of the classified service for the preceding fiscal year."

So, it's clear that many jurisdictions both see and respect the connection between an independent body's independence and a budget that cannot be used as a lever or threat by those over which the independent body provides oversight. And government ethics professionals consistently recommend guaranteed EC budgets. I'm sure there are more examples that I haven't found. I'd be much obliged to hear about any you know of, so that this list can be as complete as possible.

The Responsibilities of a Guaranteed Budget
Should the independent body, ethics commission or whatever, do something in return for getting a guaranteed budget? NYC's COIB believes so. It recommends the following:

A guaranteed budget, however, imposes a heavy burden upon the Board to use its funds prudently. For that reason, the proposal would also require the Board to provide a public, detailed list of its expenditures. Just as public financial disclosure works to discourage conflicts of interest by individual public servants, such a detailed public disclosure of COIB expenses would discourage inappropriate expenditures.

The COIB's proposal of a guaranteed budget of .07% of the city's net total expense budget, with a detailed expenditure disclosure requirement, is a very mature proposal, which should set an example for other ethics commissions. However, in smaller cities (which means every other city), the percentage will have to be higher. New Orleans' .75% appears to be a reasonable number for smaller cities.

Alternative Approaches to Guaranteeing a Budget
Alternatives include (1) the California approach of a set minimum amount, which increases with inflation; (2) the Oregon approach of assessing agencies and municipalities, which would work with counties whose cities were participating (e.g., Palm Beach County, FL) and with independent agencies and authorities that were participating in a city or county ethics program; (3) the San Diego approach of guaranteeing a minimum staff amount; and (4) the Philadelphia approach, which starts with a budget number and then allows the EC to appeal to a court if it does not feel it is being given a budget adequate for it to perform its functions (this puts a lot of burden on the EC, but at least gives it leverage with the council it would not otherwise have).

Handling Increased Responsibilities
It is important to recognize that sometimes ECs are given increased responsibilities. For example, they are charged with campaign finance, or with training all government employees, or with overseeing additional agencies and authorities, or in the case of counties, towns within the county. Increased responsibilities should be accompanied by an increase in the percentage or minimum amount. It would be best if this possibility was anticipated by including a mechanism in the guarantee for increasing the EC's percentage or minimum budget.

Robert Wechsler
Director of Research-Retired, City Ethics

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