ethics and ab 1234 · school districts and other public agencies. an active member of the firm’s...
TRANSCRIPT
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Ethics and AB 1234:No Smoke and Mirrors
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Ethics and AB 1234:No Smoke and Mirrors
FDAC Annual Conference
April 10, 2018
Presented by:
Anne L. Collins
Megan E. Macy
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Presenter Information
3
Anne L. Collins
Anne L. Collins is a Partner in Lozano Smith's Sacramento office and serves as co-chair of the firm's
Facilities & Business Practice Group. She is an experienced litigator, managing complex litigation for school
districts, special districts with a focus on fire protection districts and other public agency clients. Ms. Collins'
representation is sought in a variety of areas of litigation, including facilities and business, charter school
issues and labor and employment. She has managed several cases through jury trial, drafted and argued
numerous motions for summary judgment and successfully argued before the California Court of Appeal for
the First District. She also routinely advises clients on general legal strategies to achieve successful results
in a range of subject matters including employee complaints, special education disputes and contract
negotiations.
Partner
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Presenter Information
4
Megan Macy is the Managing Partner of Lozano Smith's Sacramento office and provides general counsel to
school districts and other public agencies. An active member of the Firm’s Labor and Employment, Facilities
and Business and Charter School practice groups, Ms. Macy works closely with clients to appreciate their
organizations, culture and goals, so Lozano Smith can support administrators in developing the right
solution for each legal issue. From assisting clients in creating excellent business practices and encouraging
positive labor relations, to advocating for their interests at the highest levels, she puts clients – and their
communities – first.
Megan Macy, Esq.
Partner
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1. Open your browser on your cell phone
2. Go to: pollev.com/lozanosmith
Interactive Presentation!
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PHONES
UP
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Why are we here?
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Why are we here?
Required Biennial Ethics Training
(AB 1234; Government Code § 53235)
Encourage Doing the Best Job for the
Public Interest
Learn How to Spot Issues Before They Become a Problem
Keep Out of the Headlines
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PHONES
DOWN
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Four Required Topics
Personal Financial Gain
Personal Advantages and Perks of Office
Government Transparency
Fair Processes
One Bonus area of discussion:
General Ethics and Principles Beyond the Law.
Government Code § 53234, et seq.
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Laying the Groundwork
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Fire District Policies/Regulations
• All public agencies are required to adopt a
Conflict of Interest Code
(Gov. Code § 87300)
– Can be by reference to 2 California Code of
Regulations § 18730
• Your District may have additional
policies/regulations
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August 2014 Report:
“An In-Depth Look at Public Corruption in California”
• Prepared by United States
Common Sense, a non-profit
policy group dedicated to open
government.
• Notes that on average
approximately 1,000 public
officials are convicted of
corruption nationwide every year.
• Studied 70 California corruption
cases in detail – money was
involved in over half the cases,
and power in all of them.
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PHONES
UP
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PHONES
DOWN
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Laying the Groundwork
“Just do the right thing.”19
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Always ask yourself:
• Will this project have a
financial impact on me?
• Is there a reason I
cannot be impartial on
this project?
• Do I have some
personal interest in the
project?
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What if a red flag is raised?
• Stop and confer.
• Often, whether there is a
conflict of interest, it is not
readily apparent.
• There are hundreds of
constantly changing rules
that apply. Know how to
spot the issue and when to
ask questions.
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10 Rules of Public Service
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Approach your job as a service to the public.
Promise only good, fair, and honest service.
Pay for your own lunch.
Buy your own tickets to events.
Accept gifts from friends and family. Return gifts from others.
Ask the District to pay for your business travel expenses.
Do personal business outside of workplace.
Be open and transparent.
Be honest and fair in all your dealings.
Always do the right thing even when no one is watching.
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10 Rules of Public Service
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Where the headlines have been for local government
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San Benito, CA
“County-funded legal team
to stop representing ex-
county supervisor Scagliotti”
- Benito Link, April 22, 2015
“County legal fees defending Scagliotti approach $600K”
- Free Lance, September 11, 2015
“Judge rules against ex-
official Scagliotti in 11-year
old case”
- Free Lance, March 3, 2015
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“Four indicted in San Bernardino County corruption probe”
– Daily Bulletin News,, May 10, 2011
San Bernardino County, CA
“Prosecutors allege biggest
corruption scandal in San
Bernardino County history”
– The Sun News, February 10 , 2010
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27
“Six Jailed in $43
Million Beaumont
Public Corruption Case”
– Renee Schiavone, Patch, May 18,
2016
Inland Empire, CA
“All seven former
Beaumont officials
plead not guilty in
corruption case”
– David Daniels, Press-Enterprise,
August 20, 2016
“Beaumont: Assets may
be frozen or seized”
– Richard K. DeAtley, Press-
Enterprise, May 20, 2016
“Momentum for Inland
Empire corruption
cases still strong”
– Joe Nelson, The Sun, April 26,
2015
“Arraignments delayed
for 3 Beaumont
corruption case”
– Gail Wesson, The Press-Enterprise,
May 18, 2016
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What’s New?
28
• Reorganization of rules continues with
substantive changes in many of the standards.
• Basic principles still apply.
• May now be more cause to seek FPPC advice on
certain issues.
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Personal Financial Gain.
Personal Advantages and
Perks of Office.
Government Transparency.
Fair Processes.
General Ethics and
Principles Beyond the Law.
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Personal Financial Gain
Bribery
• Rule:
– Public officials may not solicit, receive or agree to
receive a benefit in exchange for their official
actions.
(Penal Code §§ 67, 67.5, 68, 165)
• Penalties: Loss of office, prison time, fines,
restitution up to double the amount of the bribe
and attorneys fees. Campaign funds cannot be
used to pay restitution.(Penal Code § 86; Gov. Code § 89513)
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Personal Financial Gain
“Former Orange County Superior Court Clerk, Indicted in Bribery
Scheme to ‘Fix’ Criminal Cases and Traffic Charges”
– United States Department of Justice News, September 2016
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Personal Financial Gain
32
“South El Monte Mayor pleads guilty to bribery”
- CaliforniaCityNews.org, August 2, 2016
“South El Monte Mayor resigns”
- CaliforniaCityNews.org, August 10, 2016
“State audit underway as Ex-South El Monte Mayor pleads
guilty to bribery”
- CaliforniaCityNews.org, September 5, 2016
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Personal Financial Gain Tip
33
Avoid placing yourself
in awkward situations
in the first place.
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Personal Financial Gain
California Political Reform Act 1974
“Public officials, whether elected or appointed, should perform
their duties in an impartial manner, free from bias caused by
their own financial interests or the financial interests of persons
who have supported them.”
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Personal Financial Gain
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• You may not make,
participate in making, or use
official position to influence a
governmental decision if the
decision could have a
reasonably foreseeable
material financial effect on
the official, immediate family,
or any financial interest. (2 Cal.
Code Regs. 18700)
General Rule
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Personal Financial Gain
36
“Public Generally” Exception
• General rule: No conflict where financial effect is
indistinguishable from the public generally.
(2 Cal. Code Regs. 18703)
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Personal Financial Gain
The Fair Political Practices Commission
• Administers and enforces the Political Reform Act.
• Consultants are available to provide telephone or
written advice.
• Only written advice will provide immunity from civil
or criminal prosecution.
(Gov. Code §§ 91013.5, 91013.7)
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Personal Financial Gain
Materiality Standards
(2 Cal. Code Regs. 18702, et seq.)
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PHONES
UP
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Hypothetical #1
A Fire District is considering adding a new station in
an area of town which has recently undergone recent
business and population growth. A board member
owns an office building located in an area of the town
primarily consisting of office buildings and within a
quarter mile of the proposed new station location.
May the board member participate in decisions
related to the new station?
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PHONES
DOWN
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Personal Financial Gain
Types of
Economic Interests
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Personal Financial Gain
Business Entities
• Investment, employee, or management - $2,000 or
more.
(2 Cal. Code Regs. 18702.1)
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Personal Financial Gain
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Source of Income
• Including spouse’s income - $500 or more, 12 months
prior.
• Look to income from the sale of goods and services,
including a salary; income from the sale of personal or real
property.
• Nexus test
Source of Gifts
• $470 or more, 12 months prior.
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Personal Financial Gain
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• Income, assets,
liabilities - any 12
month period.
• Materiality standard of
$250 replaced with
new standard
• Exceptions
Personal Financial Effect
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Personal Financial Gain
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• Ownership or lease - $2,000 or more.
• 500 foot presumption for residential
property.
• Commercial property: apply business
entity standards.
• Additional catchall rule: reasonable
prudent person, using due care and
consideration under the circumstances,
would believe that it is reasonably
foreseeable the decision would influence
the market value of the official’s property.
Real Property
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Personal Financial Gain
48
“Port Hueneme councilman fined by state commission”
- CaliforniaCityNews.org, August 1, 2016
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Personal Financial Gain
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If You Are Disqualified
1. Do not participate.
2. Do not discuss or influence
(staff or colleagues).
3. Identify precise nature of
conflict at meeting.
4. Leave room (unless matter
on consent).
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Personal Financial Gain
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• Okay to speak as a member of the public if
official has a personal interest in the matter.
(2 Cal. Code Regs. § 18707)
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Personal Financial Gain Penalties
- Invalidate decision
- Misdemeanor (possible loss of office)
- Fines ($5,000 to $10,000 per violation)
- Attorneys fees (yours and others)
- Embarrassment
(personal/political)
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Personal Financial Gain
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Special Rules for Campaign Contributions
• Applies to candidates who are appointed members of
boards and commissions.
• May not receive campaign contributions in excess of
$250 from a donor with a pending matter for three
months after the decision.
• Must disqualify and disclose if received campaign
contributions in excess of $250 within 12 months
preceding the decision.
(Gov. Code § 84308)
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Personal Financial Gain
Special Rules for Contracts
• Public officers may not be financially interested in a
contract.
• Prohibits participating in the development, negotiations,
or execution of the contract.
• Applies to both oral and written contracts.
• A legislative body cannot enter into a contract if a
member has a financial interest in the contract.
• Abstention does no good.
(Gov. Code § 1090)
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Personal Financial Gain
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Special Rules for Contracts, cont.
• Limited exceptions.
• Rule of Necessity (essential goods or services).
– Abstention required.
• Harsh Penalties and Remedies.
– Contract is void and unenforceable.
– Criminal, civil, and administrative sanctions.
• With conviction, public official is forever banned from holding
any office.
• FPPC has advisory and enforcement authority.
(Gov. Code § 1090)
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Personal Financial Gain
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Future Employment (Revolving Door) Issues
• May not participate in decisions involving future employers; applies when negotiating or have an arrangement concerning prospective employment.
(Gov. Code § 87407)
• District elected officials and General Manager/Fire Chief prohibited from representing individuals and entities for pay before the District for one year after leaving office.
(2 Cal. Code Regs. § 18746.3; Gov. Code § 87406.3)
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Personal Financial Gain
56
Best Practices:
• Avoid temptation to look at
public service as an opportunity
for financial gain.
• Look at every decision and ask
yourself whether it involves
some kind of financial interest
for you.
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57
Personal Financial Gain.
Personal Advantages and
Perks of Office.
Government Transparency.
Fair Processes.
General Ethics and
Principles Beyond the Law.
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Personal Advantages and Perks
Two
Kinds of
Perk
Rules
58
2. Perks that you give
yourself (i.e., use of public resources)
1. Perks that others offer you
(i.e., gifts).
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Personal Advantages and Perks
59
Gifts from Others to Officials
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PHONES
UP
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Hypothetical #2
• Are raffle prizes won by public officials in random
drawings at the CSDA (CA Special District’s
Association) Annual Conference attended by public
officials and other individuals “gifts”?
61
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62
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PHONES
DOWN
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Personal Advantages and Perks
64
Disqualification: Disqualifying interest of $470 or more in
prior 12 months.
Reporting: Gift filers report $50 and up single source
calendar year – cumulative.
Prohibition: Gift filers limited to $470 single source per
calendar year.
• Some exceptions.
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Personal Advantages and Perks
65
Honoraria Ban (Gift Filers)
• Payments for speaking, writing
or attending events.
• Such communications are part
of the public official’s service.
• Consequences/Penalties.
– Up to $5,000 per violation.
(Gov. Code § 89201, 89506; 2 Cal Code Regs. §§
18932.4, 18950.3)
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Personal Advantages and Perks
66
Gifts from Others to District
• Must be used for official District business.
• General Manager / Fire Chief must control who
uses the gift.
• Complete Form 801.
(2 Cal Code Regs. § 18944)
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Personal Advantages and Perks
67
Gifts from District to Officials
• Considered reportable gifts to the official unless food,
beverage, etc., of nominal value or lawful expenditure of
public funds.
• Gift rules apply to District raffles unless an employee
donates gift or gift is paid for by District (except tickets).
• Gift exchanges okay as long as gifts of similar value.
(2 Cal Code Regs. §§ 18944.2, 18944.3)
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Personal Advantages and Perks
68
• Beware of District Gift Policy.
• Additional restrictions.
District Policy
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Personal Advantages and Perks
69
• Gift rules apply to event
tickets and passes, even if
provided to the District and
passed through to the official.
• Includes admission to events
the District operates.
• Exceptions
• Form 802
(2 Cal Code Regs. § 18944.1)
Tickets and Passes
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Personal Advantages and Perks
70
Gifts from Family & Friends
• Usually are not gifts; unless intermediary for
someone else.
• Family member includes former spouse of
identified members, as well as grand nephews,
grand nieces, grand aunts, and grand uncles.
• Gifts among friends exchanged at holidays,
birthdays, or similar occasions as long as not
substantially disproportionate value is okay.
(2 Cal. Code Regs. §§ 18942, 18942.2)
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Personal Advantages and Perks
71
Gifts from Family & Friends, cont.
• Wedding?
• Gift Exchange?
• Bereavement?
• Donated Gifts?
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Personal Advantages and Perks
72
• Must be made directly to District
or coordinated with District.
• Must be for official District
business, as defined, but confer
no personal benefit.
• Must be consistent with District’s
Travel Reimbursement Policy.
• Report on Form 801.
(2 Cal. Code Regs. § 18950.1)
Travel Payments from Others to District
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Personal Advantages and Perks
73
Travel Payments from Others to Officials
• A payment made for travel, including actual transportation and
related lodging and subsistence expenses reasonably related to a
governmental purpose is reportable but not subject to the gift
limitation or honoraria ban under two circumstances:
– In connection with a speech given by the official; limited to the
day immediately preceding, the day of, and the day
immediately following and the travel within the United States;
or
– Payment is by a government agency.
• Could still be a disqualifying interest.
(Gov. Code § 89506)
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Personal Advantages and Perks
74
Travel Payments from Others to Officials
• Additional Exceptions:
– Payments made in connection with a bona fide
business trade or profession
(2 Cal. Code Regs. § 18650.2)
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Personal Advantages and Perks
Travel Payments from Others to Officials
• Form 700 reporting now requires that gifts of travel
payments specify the travel destination. This is
required beginning with the 2016 annual
statement.
• Nonprofit organizations
(Gov. Code 87207, 89506; 2 Cal. Code Regs. 18940, 18942)
75
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Personal Advantages and Perks
76
Transportation Carriers
• Elected and non-elected
officials cannot accept free or
discounted transportation from
transportation carries. (Cal. Const. Art. XII, § 7)
• Does not apply to employees.
• No distinction for personal or
public business.
• Penalty is forfeiture of office.
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Personal Advantages and Perks
77
Use of District Resources
• Rule:
– Personal use of public resources prohibited (including
staff time and agency equipment).
– Political use of public resources also prohibited, includes
support or opposition of candidates or local ballot
measures.
• Purpose: To restrict incumbent’s advantages. (Penal
Code § 424; Gov. Code §§ 1098, 8314; 2 Cal. Code Regs. § 18901.1; Stanson v. Mott)
• Mass Mailing Restriction
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Personal Advantages and Perks
78
Authorized Expenditures
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PHONES
UP
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Hypothetical #3
•Do the mass mailing provisions
prohibit an agency from paying for
inserts in a local newspaper that
will include interviews of two
elected officials?
80
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81
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Hypothetical #4
May a public agency
produce and send
approximately 20,000
copies of a brochure at
public expense, featuring
the photographs and
names of the members of
the governing board?
82
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83
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Hypothetical #5
May a public agency produce and send
approximately 5,000 copies of a booklet at
public expense containing quotations from and
credits to two members of the governing board
obtained for the purpose of inclusion in the
mailer?
84
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85
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PHONES
DOWN
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Personal Advantages and Perks
87
• When not authorized
or for a public
purpose.
• Occurs when personal
benefit is not merely
incidental.
Misuse of Public Funds
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Personal Advantages and Perks
88
Consequences of Violations
• Civil penalties: $1,000/day fine plus 3X value of
resource used.
• Criminal penalties: 2-4 year prison term plus
disqualification from office.
• Can also have income tax implications.
• Costs for hiring defense lawyers.
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Personal Advantages and Perks
89
Best Practices: Personal Advantages &
Perks Laws
• Avoid perks and the temptation to rationalize about
them.
– Legally risky.
– Public relations
headache.
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90
Personal Financial Gain.
Personal Advantages and
Perks of Office.
Government Transparency.
Fair Processes.
General Ethics and
Principles Beyond the Law.
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Governmental Transparency and Fair Processes
91
Financial Interest Disclosure
• Disclose economic interests which may give rise to a
qualifying conflict of interest on the Form 700s when:
– Assuming office.
– Annually while in office.
– Upon change in position leading to a different
reporting obligation.
– Upon leaving office.
(Gov. Code § 87500; 2 Cal. Code Regs. § 18723)
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Governmental Transparency and Fair Processes
92
Charitable Fundraising
• Rule applies to elected officials (not employees).
• Disclose $5,000 or more from single source.
• Charitable, legislative, or governmental purpose.
• The requirement no longer applies to payments by
a state, local, or federal government.
(Gov. Code § 82015)
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Governmental Transparency and Fair Processes
93
Open Meeting Laws: Brown Act
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Governmental Transparency and Fair Processes
94
Public Records
• Agendas and meeting materials.
• Other writing prepared, owned, used, or retained by
agency (including electronic).
• Must respond within 10 days.
• Cost of duplication only (No recovery for staff time).
• Penalties: Adverse media attention plus attorneys
fees if litigated.
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Governmental Transparency and Fair Processes
95
• Assume all information
is public or will become
public.
• Do not discuss agency
business with fellow
decision-makers outside
meetings.
Best Practices: Transparency Laws
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Governmental Transparency and Fair Processes
96
Common Law Bias
• Public hearings must be conducted in accordance
with due process principles.
• May not be tempted by personal or financial interest.
• Disqualification even if no conflict under state law.
• Quasi-judicial proceedings (Ex: CUP issuance or
revocation): refrain from taking a position before
hearing all the evidence at the public hearing.
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Governmental Transparency and Fair Processes
97
• May not simultaneously hold two
public offices that are
incompatible (possibility of a
significant clash of duties or
loyalties of office).
• Penalty: Forfeit the first office
upon acceptance of the second
office.
(Gov. Code § 1099)
Incompatible Offices
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Governmental Transparency and Fair Processes
98
• Typically, District policies prohibit related persons from working in the same department or under the supervision of the other where there is the potential for adverse impact on supervision, safety, security, or morale.
Anti-Nepotism Laws
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Governmental Transparency and Fair Processes
99
Competitive Procurement in Public Contracting
• Public contracting laws give parties an opportunity to do
business on an equal basis.
• Inviting competition guards against favoritism, fraud, and
corruption, and secures the best work or supplies at the
lowest price practicable.
• Public Contract Code section 20810, et seq.
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Governmental Transparency and Fair Processes
100
Best Practices: Fair Process Laws
• Think fairness and merit-based decision-making in your
decisions.
• Keep politics separate from relationships with agency
staff.
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101
Personal Financial Gain.
Personal Advantages and
Perks of Office.
Government Transparency.
Fair Processes.
General Ethics and
Principles Beyond the Law.
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General Ethics and Principles Beyond the Law
I never had a policy;
I have just tried to
do my very best
each and every day.
~ Abraham Lincoln
102
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General Ethics and Principles Beyond the Law
The right to do something does not mean that doing it
is right. ~ William Safire
103
Ethics and equity and the principles of justice do not
change with the calendar. ~ D.H. Lawrence
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General Ethics and Principles Beyond the Law
104
One Falsehood spoils a thousand truths.
~ African Proverb
If you tell the truth you don’t have to remember anything.
~ Mark Twain
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PHONES
UP
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106
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Additional Resources
• Institute for Local Government
www.ca-ilg.org
• California Fair Political Practices
Commission
www.fppc.ca.gov
• California Attorney General
www.oag.ca.gov/publications
107
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Questions
108
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109
Disclaimer: These materials and all discussions of these materials are for instructional purposes only and do not constitute legal advice. If you need legal
advice, you should contact your local counsel or an attorney at Lozano Smith. If you are interested in having other in-service programs presented, please
contact [email protected] or call (559) 431-5600.
Copyright © 2018 Lozano Smith
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