Tolbert: Ethics Commission Gearing Up For New Challenges

by Jason Tolbert (jasontcpa@yahoo.com) 11 views 

The recently passed Issue 3 – which now is part of the Arkansas Constitution – has many moving parts that affect a lot of different groups. The Arkansas Ethics Commission is one of these groups and they are gearing up to deal with the new issues. This week, I emailed Ethics Commission Director Graham Sloan, who provided some detailed insight on how this new law will impact his agency’s work.

I will reprint his responses in full below, but one thing certainly stands out – the Ethics Commission already has an overloaded staff and with the new regulations this will increase.

We can pass all the new laws in the world that make us feel like we are accomplishing things, but unless we adequately fund the enforcement, the new ethics rules will not do any good. You can argue over whether voters truly understood all the details of Issue 3, but I believe it is clear that they at least were expressing their desire for tighter ethics rules on our state elected officials. The state legislature would be wise to recognize this when considering how to fund the Ethics Commission’s tasks with a lot of heavy lifting on this front.

Here is our interview…

1.    What new responsibilities does the Ethics Commission have under Issue 3?

As I’m sure you know, the ethics amendment (Issue 3) was referred to the people by the General Assembly. The Ethics Commission was not involved in the drafting of the amendment. There are three (3) areas where the ethics amendment overlaps with the laws under the Ethics Commission’s jurisdiction. In each of those areas, the amendment contained language to the following effect:

In addition to the penalty under subdivision…of this section, the General Assembly shall provide by law for this section to be under the jurisdiction of the Arkansas Ethics Commission, including without limitation authorization of the following actions by the Arkansas Ethics Commission:

                        (A) Promulgating reasonable rules to implement and administer this section as necessary;

                        (B) Issuing advisory opinions and guidelines on the requirements of this section; and

                        (C) Investigating complaints of alleged violations of this section and rendering findings and disciplinary action for such complaints.

In keeping with those provisions of Issue 3, I would anticipate that the General Assembly will give the Ethics Commission jurisdiction over those areas of the amendment which overlap with the laws under the Commission’s jurisdiction. At the present time, however, the changes made by Issue 3 are not yet under the Commission’s jurisdiction. It is noted that the “powers” set forth in (A)-(C) are the same ones the Ethics Commission currently has with respect to the laws already under its jurisdiction.

2.    What will be the process for setting up new rules and requirements under this law?  Will this require legislation or is there some things the Ethic Commission will begin doing immediately?

The rule making process is set forth in the Administrative Procedure Act (Specifically, Ark. Code Ann. § 25-15-204).  Normally, the Ethics Commission waits until after a particular legislative session is over to open the rule making process. In order to know which sets of rules need to be amended and identify all of the changes, it makes sense to wait until all of the bills have been passed during a particular session. Additionally, it remains to be seen whether the General Assembly is going to (i) simply let Issue 3 be written into the Constitution, (ii) pass mirror image statutes in addition to letting Issue 3 be written into the Constitution, or (iii) repeal and amend the existing statutes to incorporate the changes made by Issue 3 while letting Issue 3 be written into the Constitution. How that gets handled by the legislature will impact whether the Commission might need to amend an existing set of rules or promulgate a new set of rules.

And then, there’s also the passage of Issue 1 to be considered. It provides as follows:

§ 42. Review and approval of administrative rules.

(a) The General Assembly may provide by law:

(1) For the review by a legislative committee of administrative rules promulgated by a state agency before the administrative rules become effective; and

(2) That administrative rules promulgated by a state agency shall not become effective until reviewed and approved by the legislative committee charged by law with the review of administrative rules under subdivision (a)(1) of this section.

(b) The review and approval by a legislative committee under subsection (a) of this section may occur during the interim or during a regular, special, or fiscal session of the General Assembly.

In the event the General Assembly elects to provide that agency rules aren’t effective until approved by a legislative committee, that will likely necessitate amendment of the Administrative Procedure Act. So, rule making could be delayed for all state agencies until that happens. However, there seems to be a question as to whether rules promulgated by the Ethics Commission to implement and administer Issue 3 would be subject to review under Issue 1. It has been argued that Issue 3 was passed after Issue 1 and Issue 3 doesn’t say that rules promulgated by the Ethics Commission to implement and administer Issue 3 would be subject to review under Issue 1. So, it appears that there are some procedural questions which may need to be answered. Meanwhile, the Commission is working on all the cases which got filed shortly before the election. By law, the Commission only has 150-180 days to complete its investigation and take final action in a particular case. We’ve got all hands on deck right now making sure that duty gets met.  

3.    How much to you envision the new law will add to the workload of the Commission?  How is the Commission planning to handle this – new staff, more budget request, etc.?

The passage of Issue 3 has already added to the Commission’s workload. The volume of questions the Commission has been receiving has been significant. In addition, it will be necessary to amend existing sets of rules and/or promulgate new sets of rules. The rule making process is both expensive and time consuming. At this time, it is hard to predict the number of advisory opinion requests and complaints regarding Issue 3 which will be received. Separate and apart from Issue 3, the Commission was already asking for more staff and also for an increase in operations to move to a larger office. The need for a larger office exists even in the absence of more staff. Here’s some information about the Ethics Commission’s budget request for the 2015-17 biennium.

The Commission’s staff has remained at 9 employees since 1999 and it’s appropriation for operations has actually declined over that period of time from $108,367 to $88,898 (an 18% decrease). Several years ago, the Commission’s funding was moved from the Central Services fund to the Miscellaneous State Agencies fund which has resulted in spending blocks which effectively reduced the amount available for operations even further. For example, the amount actually available to the Commission for operations was only $75,729 in FY13 and $74,797 in FY12.

The Ethics Commission is requesting 3 new employees and an increase in operations from $88,898 to $114,578 (FY16) and then $111,078 (FY17).  In connection with formulating this request, the Commission reviewed its activities and programs in order to determine whether or not a reallocation of existing staff and operating expenses would be sufficient to meet growing needs.  However, as a small agency, the Commission is already working to provide agency services and enforce the laws under its jurisdiction with limited staffing and on an extremely tight budget.  Because the option of reallocating existing staff and operating expenses as an alternative to this budget request does not appear to be viable, the Commission is seeking to add the following additional positions: 1 Managing Attorney at a salary of $73,776 per year, 1 Attorney Specialist at a salary of $53,109 per year, and 1 Compliance Specialist at a salary of $49,067 per year.

The Commission currently has 2 Attorneys and 2 Directors of Compliance. The new positions would raise the numbers to 3 Attorneys and 3 Directors of Compliance and also add a Managing Attorney to help supervise those 6 staff members. The attorneys and directors of compliance are the members of the Commission’s staff who are responsible for performing the compliance functions. If the Commission was a car, they’d be the engine. In essence, the Commission has been operating with a 4 cylinder engine and is asking for 2 more cylinders and someone to help keep the engine running smoothly.

With regard to the increase in operating expenses, there are 2 components: (i) the relocation of the Commission’s office which has been requested by the 5 Commissioners, and (ii) cost elements due to the addition of 3 staff positions. Turning first to the relocation of the Commission’s office, the space the Commission currently occupies is cramped and requires staff to juggle seating and presentation needs to accommodate board members, staff, complainants, respondents, and witnesses involved in case presentations, as well as members of the public and media in attendance during monthly meetings.  It is noted that the term of the Commission’s current office lease will expire at the close of FY 2015.  In accordance with the request of the Commission’s board to relocate to more suitable office space, the Commission is requesting an increase in its operating expenses for the cost elements for (i) Rent of Facilities, and (ii) Hauling & Moving Expenses.

Turning to the remaining cost elements in the Commission’s request for an increase in its operating expenses, such elements are related to the Commission’s personnel request and are as follows: (i) Network Services, due to technology requirements in accordance with the Commission’s Information and Technology Plan (email/telephone/connectivity, etc.) for 3 additional staff positions; (ii) Employee Mileage, due to mileage reimbursement for 3 additional staff positions, all of whom conduct both investigations state-wide and training sessions state-wide; and (iii) License & Permit, due to the Arkansas Supreme Court License Fee for licensed attorneys for 3 additional staff positions.

Finally, here is some information I previously compiled in response to being asked if there had been an increase in the actual number of cases being processed by the Commission. I compared the 2012 election cycle (2011 and 2012) with the2014 election cycle (2013 and 2014). Because the information was compiled at the midpoint of calendar year 2014, I doubled the numbers for the first ½ of the year to come up with a projected total for 2014. That projection has proved to be accurate. Here are the numbers I came up with:

  • The total number of cases for the 2012 election cycle was 101 and the total number of cases for the 2014 election cycle will be 141.
  • The average length of a probable cause report during the 2012 election cycle was 15 pages and the average length of a probable cause report for the 2014 election cycle will be 24 pages.
  • With respect to the 2012 election cycle, 66 of the 101 cases were filed by citizens and the remaining 35 were filed by the Commission itself.
  • With respect to the 2014 election cycle, 122 of the 141 cases will have been filed by citizens and the remaining 19 will have been filed by the Commission itself.

To me, the numbers show: (i) that the actual number of cases being processed by the Commission has increased; (ii) that the increase in number of cases being brought by citizens (up from 66 to 122) has resulted in fewer cases being brought by the Commission itself (down from 35 to 19); and (iii) that the cases are becoming more involved (the average report is up to 24 pages from 15 pages). With respect to observation (ii), most cases brought by the Commission tend to arise out of compliance reviews. The fact that more time is being spent investigating cases filed by citizens is cutting into the time available to monitor compliance of the various types of persons required to file disclosure forms. With respect to observation (iii), not only are more issues being raised but the issues are becoming more complex. In summary, the Commission needs more manpower because there are more cases and the cases themselves are becoming more complex.

4.    Have any of the previous reporting requirements regarding gifts received by public servants or amounts spent by lobbyists changed?  If so, how?

Rather than simply changing the language found in existing statutes, Issue 3 amended the Arkansas Constitution. Those amendments overlap with existing statutes and where the language of the existing statute is not in keeping with the Constitutional amendment, the latter will prevail. I’m not sure all the possible scenarios have even been contemplated at this point in time so it’s not possible for me to list all the changes which have actually been made by the passage of Issue 3. And it needs to be remembered that Issue 3 isn’t even under the Commission’s jurisdiction of the Ethics Commission yet and that the Commission itself (and not a staff member) will be the one to provide answers. But, here are some general observations:

The existing gift prohibition statute (Ark. Code Ann. § 21-8-801) applies to gifts given to/received by all public servants ( persons elected, appointed, and/or employed to serve a governmental body at the state, district, county, municipal, and/or school district level). The definition of “gift” includes “anything of value” but there a number of exceptions and one of those exceptions is “anything with a value of $100 or less”. If something isn’t worth more than $100, then it isn’t a gift and isn’t prohibited by the statute in question. And § 21-8-801 doesn’t prohibit the receipt of all gifts, just those intended to reward a public servant for performing the duties and responsibilities of his or her office or position or to influence past or future action. It does not prohibit gifts conferred on account of a personal, professional, or business relationship that exists regardless of the official status of the recipient.

Compared to the thousands of public servants covered by § 21-8-801, far fewer public servants are covered by the “gifts from lobbyists” Section of Issue 3. There’s a list of 9 categories of persons covered by the “gifts from lobbyists” Section of Issue 3 but it looks like the total number of public servants covered is only 149 persons.  The definition of “gift” as used in that particular Section includes “anything of value” but there aren’t as many exceptions and “anything with a value of $100 or less” isn’t one of them. On its face, the restriction applies to gifts from lobbyists, a person acting on behalf of a lobbyist, or a person employing or contracting with a lobbyist. The wording of the “gifts from lobbyists” Section of Issue 3 makes no provision for gifts conferred on account of an independent personal, professional, or business relationship. In short, it appears that Issue 3 has, in fact, made changes to how a lobbyist is permitted to spend money on certain (but not all) public servants.

There are several categories of public servants required to file a Statement of Financial Interest (“SFI”) and one of those categories is a “public official”. One of the information fields in that disclosure form applies to gifts and the definition of “gift” for SFI purposes is the same as the definition of “gift” for purposes of § 21-8-801. So, Issue 3 does not appear to have changed the gift reporting requirements applicable to a public servant filing a SFI. Ark. Code Ann. § 21-8-804 is another gift reporting statute but I’m not sure it is germane to the foregoing.

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