Public information requests and ongoing investigation triggers reforms by Austin’s Ethics Review Commission
Investigative Report by Joseph Caterine and Ken Martin
The Austin Bulldog’s investigation indicates that 12 non-elected City of Austin officials failed to file Statements of Financial Information that were due in April 2013. That number is disputed by the City. (More about that later.) A public information request for the statements due in April 2014 is awaiting the City’s response.
Of the 147 Statements that were filed by non-elected officials in 2013, only 56 forms were filled out correctly, according to The Austin Bulldog’s analysis.
This is not a story exposing conflicts of interest among City of Austin staff members but about the city’s lack of oversight that would prevent or assist in the discovery of such conflicts.
This investigation exposed problems the city has in identifying which city staff members are required to file and found the city has done nothing to discipline those who file late or not at all.
The stir caused by six public information requests filed for this investigation between January 6 and April 2 caused the city staff and Ethics Review Commission to initiate a number of reforms. These reforms include revising reporting forms to clarify what information is required and agreeing to perform annual audits after the filing deadline.
“It’s always been my position that it seems like a waste to make people file this information if nobody actually looks at it,” Ethics Review Commission member Peter Einhorn said at the April 29 meeting.
And that’s one of the key findings of this investigation: City Code requires designated city officials to file these reports but, beyond reminding officials to file, oversight has been nonexistent.
Financial disclosures are required as part of the City of Austin’s ethics policy. Austin City Code Section 2-7-1 establishes a policy that public office will not be used for personal gain. It establishes guidelines for ethical standards of conduct and calls for the disclosure of private financial or other interests.
To that end, the mayor, council members, and some 165 designated non-elected city officials are required to file annual financial disclosures. Elected officials are also required to file mid-year updates.
The stated goal of the policy is that the public have confidence in the integrity of its government, yet these financial disclosures are not posted on the city’s website for easy access and instead are only made available through a public information request.
As part of our mission to hold public officials and agencies accountable, The Austin Bulldog has been reporting on the financial disclosures of the city’s elected officials since 2011 and has published their financial statements going back as far as 2008.
This year, The Austin Bulldog extended scrutiny to the financial disclosures filed by designated non-elected city officials.
Who has to file?
City officials who must file financial statements are designated each year by the Human Resources Department, but that process suffers from indecision and inconsistencies.
City Code Sections 2-7-2(3) and 2-7-71(1) list the position titles of those required to file, including the mayor and council members and their aides, municipal court judges and substitute judges, the city manager, assistant city managers, city clerk, deputy city clerks, city attorney, deputy city attorneys, treasurer, comptroller, city auditor, purchasing officer, commissioners of the Convention and Visitors Commission, department heads, deputy departments heads, and, where no deputy department head serves, the first principal assistant of such department, and spouses of each.
Members of city boards, commissions, committees, task forces, or other city bodies and their spouses are also required to file unless specifically exempted by the city council. These officials were not included within the scope of this investigation.
Assistant City Attorney Cynthia Tom is one of the staff members who assist the Ethics Review Commission. At the April 29 meeting Tom voiced concerns she had received from Human Resources Department: “Those job titles (listed in the City Code) may not necessarily correspond with who the City Manager at the time thinks is an executive and thinks should actually be filing.” She did not address the question of whether the city manager, or anyone else, has the latitude to permit variances from the requirements set forth in City Code.
She went on to explain that the Human Resources Department struggles to determine whether an Office qualifies as a Department, or whether or not assistant directors should file: “If (an Office or Department) has only five people, should the assistant file? What if the Office has four hundred people?”
She said the Human Resources Department had indicated it would be willing to work with the Commission to resolve these problems.
City Clerk Jannette Goodall echoed these concerns in her testimony to the Commission: “We don’t have a really good way of easily identifying all of those positions,” she said. “It’s difficult sometimes to know if a job title is actually at this level that they would be required (to file a statement of financial information).”
Some reminders withheld
Once notified by the Human Resources Department of which non-elected officials are required to file Statements of Financial Information, the City Clerk’s Office e-mails a series of reminders to these officials. The Clerk’s Office receives and stores the Statements filed, and notifies the Law Department’s Ethics and Compliance Team of anyone who filed late or did not file.
No city official reviews the Statements for completeness or requires employees to supply missing information. No one reviews Statements to identify possible conflicts of interest.
The Austin Bulldog submitted a public information request February 12, 2014, for all written materials used to notify officials of the requirement to file Statements of Financial Information. The city provided the e-mail reminders sent by Assistant City Attorney John Steiner in 2009, 2010, and 2011, when he served as the city’s Integrity Officer.
In 2010, officials were notified in March that they had to file by the last Friday in April. They were reminded a week before the deadline and again the day of the deadline, with a warning that “the Code does provide penalties for failure to file.” Two weeks into May, those who had not filed were notified, and again a month and a half after the deadline.
In 2011, officials were notified in March of the April deadline. They were reminded a week before the deadline, but not the day of the deadline, and the warning about penalties was omitted. Those who had not filed were e-mailed a week after the deadline and again three weeks after.
As part of the city manager’s staff reorganization in early 2012, the Integrity Officer’s position was abolished and the function was transferred to the Law Department’s Ethics and Compliance Team.
The city did not provide copies of reminders sent in 2012 and 2013 by the city’s Ethics and Compliance team.
Instead, the Law Department asked the Texas Attorney General for permission to withhold these records, claiming attorney-client privilege. On May 5, the AG’s office issued Texas Attorney General Opinion OR2014-07497. The opinion granted permission to withhold records consisting of communications “made for the purpose of facilitating the rendition of professional legal services.”
Missing statements
Due to the inconsistent nature of the Human Resources Department’s determination process, it is difficult to ascertain which officials were required to file and, therefore, which failed to do so.
The Austin Bulldog’s investigation identified 17 officials whose Statements were not produced in response to public information requests and who fit the Code’s definition of those required to file.
When confronted with this list, the city e-mailed a response that offered excuses to explain the missing Statements. The only official the city spokesperson did not defend was Police Chief Hubert “Art” Acevedo, admitting that there was “no filing record for 2013.”
Four officials—Ian Hatlett (deputy chief animal services), Yolanda Miller (deputy purchasing officer), Garland Ellis (deputy officer governmental relations), and John Ralston (assistant director administration and finance)—had filed in previous years. The city spokesperson claimed that this year Human Resources determined they were no longer required to file, but provided no further explanation.
Carla Scales (former assistant director human resources) and Sean Mannix (former assistant police chief) both left their positions in early 2013. (Scales transferred to a position that is not required to file a statement.) The city’s response indicated this relieves them of their requirement to file. But City Code Section 2-7-72(B) states that “any salaried City official who resigns or is terminated for any reason shall file with the city clerk a public statement of financial information which shall cover the current year to the date of resignation or termination on or before his last day as a salaried employee. In such event, a salaried employee shall not be required to file a public statement of financial information for the year in which the resignation or termination occurred. He shall, at that time, also file a statement of financial information for the previous year if one has not been submitted prior to the employee’s termination date.”
Finally, the city spokesperson claims that “records show” that Nancy Williams (aide to Mayor Lee Leffingwell), Jose Guerrero (assistant director watershed protection), Louis Gonzales (assistant police monitor, not the assistant director of EMS), Brian Manley (assistant police chief), and Rebecca Sonego (municipal court judge) all filed. Despite The Austin Bulldog’s multiple public information requests for 2013 Statements, the city did not produce records for these officials.
Other officials fill positions that City Code requires to file, including Herbert Dean (deputy officer building services), David Matustik (deputy officer communications and public information), Leanne Pacatte (deputy chief communications and technology management), Urcha Dunbar-Crespo (fleet deputy officer), and Jennifer Walls (fleet deputy officer), but the Human Resources Department did not require them to file, according to the city’s e-mail response.
Excluding this last group, our investigation has concluded that twelve officials failed to file Statements of Financial Information in 2013.
The Austin Bulldog’s attempts to communicate with individuals about these Statements resulted in intervention by Public Information Office, which thwarted efforts to obtain information directly from the officials who are personally responsible for filing.
Penalties unenforced
Despite the fact that City Code Section 2-7-99 states a fine not exceeding $500 is obligatory for failure to file, a city spokesperson confirmed that no fines or penalties were levied against the officials who failed to file in 2013 or against the 25 officials who had filed after the deadline.
The failure to file a financial disclosure may be the basis of a sworn complaint filed with the City Clerk in accordance with City Code Section 2-7-31(D). The Ethics Review Commission shall hear and rule on the complaint and, if it finds a violation has occurred, shall notify the city attorney recommending prosecution or setting forth requirements for voluntary compliance, in accordance with City Code Section 2-7-47.
The Ethics Review Commission may also consider a possible violation on its own initiative, per City Code Sections 2-7-31(D) and (F).
Forms filled out improperly
Of the 149 statements received in response to public information requests, many did not respond to certain items appropriately.
The most prevalent mistake involved the question concerning sources of income, but there were other errors as well, like misspellings, unspecific descriptions of investments, and unreported affiliations. In all, only 56 officials filled out the forms correctly—38 percent of those who filed.
The first question of the form states: “List all sources of occupational income that exceeded 10% of your gross income or $5,000 in salary, bonuses, commissions or professional fees, or $20,000 in payment for goods, products or non-professional services per source.”
Given the parameters of the question, every official should have at least entered “City of Austin,” but many left it blank.
When this concern was raised with the Public Information Office, a city spokesperson responded via e-mail: “The code, as it is currently written, is unclear on whether current City income should be included in the disclosure form. The disclosure form is intended to identify outside sources of income or other financial arrangements that may have an influence or present a conflict of interest with the individual.”
City Clerk Goodall, in her testimony to the Ethics Review Commission, suggested that she could utilize the city’s information technology group to make City Income a default response, and then employees “don’t even have to think about it,” she said.
Spouse or domestic partner’s income
According to City Code Section 2-7-72(E), officials must also include their spouse or domestic partner’s sources of income. A total of 36 officials did not include this information in their 2013 filings.
In his e-mail, the city spokesperson also spoke to this issue: “As you know, the current disclosure form includes a field for spouse/domestic partner occupation. The assumption by those completing the disclosure is that this field satisfies the referenced requirement in 2-7-72(E) of the code.”
Providing a spouse’s occupation is not the same as providing their source of income. Without the name and address of their employer, a conflict of interest would be impossible to determine.
State Representative Donna Howard authored HB 1074 for the 2013 legislative session. The bill that would have made state officials’ financial disclosures available to the public on the Texas Ethics Commission’s website.
HB 1074 would also have closed a loophole in Government Code Section 572.023(a) that allows the reporting official to omit from financial statements the financial activity of a spouse or dependent children if the official did not have “actual control” over that activity.
Howard said she thinks that it is necessary for the spouse’s employer’s information to be included. “(My spouse’s income) is still my income because this is a community property state,” she explained.
One chief distinction between the filing requirements under state law and the City Code is that state law does not address domestic partners and therefore the income and assets of domestic partners need not be reported.
City Code Section 2-7-71(2), however, states, the “spouse of a City official includes a domestic partner, which means an individual who lives in the same household and shares common resources of life in a close, personal, intimate relationship with the City official if under Texas law the individual would not be prevented from marrying the city official on account of age, consanguinity, or prior undissolved marriage to another. A domestic partner may be of the same, or opposite, gender as the City official.”
Thus the income and assets of spouses, to include domestic partners, must be reported under city code. And unlike state law, there is no exemption in City Code to allow omission of the financial activity of spouses or domestic partners over which the city official has no control.
The city’s elected officials, city manager, and city attorney also are required to file separate financial statements per Local Government Code Section 145.002. Non-incumbent candidates for mayor and city council must also file per Local Government Code Section 145.003(a) and must do so within five working days after the filing deadline per City Code Section 2-7-74(A). The filing deadline is August 18. The statements will be due August 25.
Security risk?
Twenty-six city officials chose to withhold their spouse or domestic partner’s information in accordance with the Texas Public Information Act Section 552.117, which states that information that would otherwise be considered public is exempted from disclosure if it “is information that relates to the home address, home telephone number, emergency contact information or social security number … or that reveals whether the person has family members.” To that end, the city redacted that information from the Statements filed by these individuals.
This exemption poses a fundamental problem that hampers scrutiny of financial statements to identify possible conflicts of interest. A spouse or domestic partner’s employer’s information would certainly imply that the official has a family member, but without that information not all potential conflicts of interest would be visible.
This dilemma also exists at the state level; it is a predicament that Representative Howard confronted when she attempted to pass HB 1074. The bill failed to pass because it would allegedly create security risks, like identity theft, for state officials.
In our interview, Howard expressed doubts about this reasoning: “If there is a real issue with security, we can address that.” In an amendment to her bill, she made it possible to redact residential information from the statements, but it was not enough to appease the opposition.
“I would think that some people just want to make sure that a lot more information is protected, and that (“security risk”) was a convenient thing to say publicly, but that in fact people are hesitant to report a lot of their connections, I think, for how it might appear, even if there’s nothing wrong going on.”
Howard asserted, however, that she believes the public’s right to a transparent government should outweigh these political concerns.
Ethics Review Commission decision
After City Clerk Goodall finished her presentation, the Commission decided to create a working group that would revise the Statement of Financial Information forms to make sure the language was clear, and they agreed to also determine who has to file.
Commission chair Austin Kaplan then proposed another working group be established to perform an annual audit of the forms after the filing deadline. Assistant City Attorney Tom confirmed that performing a review of the statements was consistent with the Commission’s authority under City Code Chapter 2-7.
After some deliberation, the Commission decided the working group would review all statements rather than a random sample, and that they would be looking mostly for uniformity in how the forms were completed, with the ultimate goal of developing a policy for reviewing the forms.
The Commission commended The Austin Bulldog’s investigation for prompting these reforms.
The statements
Even though the Ethics Review Commission will begin to conduct its own audit of financial statements due in April 2015, it should be noted that the Commission will be checking only for inconsistencies—not for conflicts of interest.
It is up to the public to hold these officials accountable. With this report, The Austin Bulldog is publishing all of the 2013 statements for readers to download and search, along with a spreadsheet to illustrate the basic findings from each official’s statement.
The Austin Bulldog has submitted a public information request for the 2014 statements that were due in late April and will be publishing a follow-up story once these statements are received and our analysis is completed.
Links:
Austin City Staff Sworn Financial Statements for 2013 (720 pages in a searchable PDF)
Infographic: Austin City Staff Financial Statements for 2013
Spreadsheet: Statements of Financial Information for Designated Non-Elected City Officials 2013
Related Bulldog coverage:
Austin Governed by the Well-to-Do: November 2014 elections may deliver economic diversity in next city council, May 17, 2013
Council Member Mike Martinez Reports Big Gains in Financial Assets: May have failed to report major investments in last annual report, August 17, 2011
