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Report and Recommendations Regarding the

New Castle County Ethics Commission

September 2002

Emily Knearl

Policy Director

New Castle County Council

(302) 395-8394

eknearl@co.new-castle.de.us

I.  Introduction

On August 6, 2002, New Castle County Council requested a report and recommendations for September 10, 2002, regarding whether to eliminate the New Castle County Ethics Commission and return ethics monitoring of New Castle County government to the State Public Integrity Commission, or whether to retain an Ethics Commission with a local Code of Conduct and financial disclosure requirements.

The events that stimulated the request for this study were the resignation of the Ethics Commission in early August 2002, and the subsequent questions that arose regarding whether this function could be more effectively provided by the State of Delaware (as occurs with ethics monitoring in Kent and Sussex Counties).  Further urgency has been added to this issue since it became clear that the members of the former Ethics Commission intend to retain the County ethics records until this issue is resolved.

Four major considerations drive this report and its research.  These considerations emerged over the past month from the gathering of research and analysis of applicable state and county codes. They are in no particular order, but are critical in guiding County Council’s decision-making on the future of ethics  regulation and policy-making.  The County must:

·        Maintain (or potentially increase) public confidence in New Castle County government ethics;

·        Keep the financial disclosure requirement for County officials, appointees, and employees;

·        Ensure that ethics policy-making, funding and implementation are independent from political influence;

·        Increase the amount of education and training provided to County officials and employees regarding County ethics policy and financial disclosure requirements.

II.  Background for Report

To set a context for this report, both the County code and the State law in regards to ethics separate code of conduct requirements from financial disclosure requirements. Code of conduct laws address the behaviors that are appropriate for elected officials and employees.[1]  Financial disclosure requirements stipulate the financial information that all elected officials, and selected board appointees and employees, must report on an annual basis to the applicable regulatory body. As a result of the separation between code of conduct requirements and financial disclosure requirements in both State law and County code, the below analysis and recommendations will also address the two separately.

Lastly, State law requires that the Public Integrity Commission affirm the County Code of Conduct to be at least as stringent as State law.  As a result, all County Code of Conduct rules can be assumed to be at least as strict as State rules.

III. Answers to Council Questions

To provide background research for its decision on the future of ethics monitoring in New Castle County, Council requested the following questions be researched and answered by Council staff.  The questions are in the order in which they were researched and sources for answers were State and County codes, discussions with Council’s legal counsel and others, budget information, analysis of  ethics funding in other jurisdictions, and other sources of information. 

A.  Questions

1.      Are there any major differences between the County Code of Conduct and the State Code of Conduct?

Yes, although the codes are very similar, there are a few differences. The major differences are:   

·        The Conflict of Interest Section on Contracting: While the State requires public bidding for contracts worth more than $2,000 where the public official has 10% or more of equitable ownership in the company seeking the state contract, the County only allows 5% equitable ownership in the company seeking the county contract in contracts worth $500 or more before the public bidding process must be used.  [Source: Delaware Code, Title 29, Subchapter I, Section 5805 (c) and New Castle County Code, Chapter 2, Article 3, 2.03.103 (C) ]

·        The Definition of Immediate Family:  For conflict of interest purposes, the definition of “immediate family” or “close relative” differs slightly between the State and County.  The State definition includes parents and siblings in the definition of “close relative,” while the County does not.  In addition, the County requirements use the term “dependent child” while the state simply uses the term “child.” [Source: Delaware Code, Title 29, Subchapter I, Section 5804(1) and New Castle County Code, Chapter 2, Article 3, 2.03.102]

2.      Are there any differences between the financial disclosure requirements under State law compared to financial disclosure under the County code?

Yes, while County code requires that New Castle County officials and selected employees provide financial disclosures to its Ethics Commission, State law contains no such requirement for local officials.  (Source:  State Code, Title 29, Chapter 58, Subchapter II, Section 5812.)

Thus, if the State took over all County ethics monitoring, county elected officials, appointees and employees currently required to file a financial disclosure form would no longer have to do so. 

In addition, while the State law does require financial disclosure for State officials and employees, it does not require as part of that disclosure provision information on real estate interests. (Source:  Delaware Code, Title 29, Chapter 58, Subchapter II).  If a State law is passed to require financial disclosure by New Castle County officials, appointees, and employees, it should include the requirement that real estate information be disclosed.

3.  What state laws, if any, would need to be passed to make the rules that apply to County officials, appointees, and employees as stringent as the New Castle County financial disclosure requirements and the Code of Conduct?  

There are several differences between State law and County code, but to focus upon the most applicable differences for this analysis, two laws would need to be passed by the General Assembly.  The first would require financial disclosure by New Castle County elected officials, appointees, and employees, including disclosure of real estate interests. 

The second would stipulate in State law that a New Castle County contract is subject to a public bidding process if the contract is worth more than $500 and the amount of equitable ownership a County official or employee has in the private contracting enterprise is more than 5%.  

4.  What role, if any, could County Council play in regulating County officials and employees if all ethics monitoring responsibilities were turned over to the Public Integrity Commission?

Under current law, County Council could not  pass binding legislation that regulates County officials, appointees and employees if the PIC had responsibility for monitoring ethics for New Castle County government.

5.  According to the Public Integrity Commission, what resource requirements are needed by that body if it is to take over ethics monitoring for the County?

This amount is unknown at this time. In its August 27, 2002 letter, the Public Integrity Commission (PIC) stated that without General Assembly action it is impossible for the State to re-assume ethics monitoring for New Castle County government and, therefore, declined to provide any financial estimates.  However, if there was an increase needed to the PIC budget, it would take General Assembly action to make that possible.

6.  If it is determined that the Ethics Commission should remain at the county level, what method of appointment could be used to ensure the independence of the body?

The current split between the County Executive who appoints three members and County Council who appoints four members appears to balance the interest of the two branches.  To increase the independence of the process further, a panel of three respected community leaders could be formed to recruit and screen potential candidates for the County Ethics Commission.

The panel could consist of an ethics professor from a local university, a representative from the community, and a member of the Delaware Bar Association.  The panel could be smaller or larger depending upon the amount of its responsibilities.  The panel should not become too large, however, to avoid the risk of becoming unwieldy.

The panel’s recommendations could then be turned over to County Council and the County Executive who would select appointees from the panel’s list.  This is similar to a process  used on the State level to screen applicants for judgeships for the Governor.  A nine person judicial nominating committee consisting of five attorneys, including a representative of the Delaware Bar Association and four laypersons reviews applications, checks references and interviews applicants. This committee then provides a list of acceptable applicants to the Governor who is required to nominate only those applicants contained on the judicial nominating committee’s list.

Over the past few months, there have also been discussions regarding the Miami-Dade ethics commission model where commission members are selected by community leaders. Their commission consists of five members, two of whom are appointed by a federal judge, one of whom is jointly appointed by the deans of two local law schools, one of whom is appointed by the Director of the Florida International University’s Center for Research and Studies, and one of whom is appointed by the Miami-Dade League of Cities.  This model was mentioned favorably in New Castle County Council meetings because citizens independent from Miami-Dade government make the ethics commission appointments.   This model should be explored further if the recommendation in section IV regarding independence and impartiality for the ethics commission is not satisfactorily resolved.

7.  What resources are needed if there is to be a County Ethics Commission?

There are differing opinions as to the resource needs of a county ethics commission.  Studying a sample of other counties in other states does not give a definitive answer.  The amount budgeted for 2003 is more or less roughly in line with a sampling of other counties in other states.[2]  However, every county is different and the special circumstances in one county may justify a completely different ethics budget than the circumstances in another county.

One need that must be met immediately on the county level is increased education and training of County officials, appointees and employees by the Ethics Commission staff.  This focus on education could include quarterly newsletters, regular seminars, and handouts for new hires and board appointees, as well as for current staff, on County ethics requirements. These responsibilities may be time consuming, but are critical to keeping ethical standards high. 

To address this need, the County may want to consider shifting the amount budgeted for outside investigations and research ($30,000 in FY 2003) to fund a full-time attorney and ¼ - ½ dedicated staff assistant.  The re-allocation of the funds should not cause an undue hardship because in FY 2002, $30,000 was also allocated for outside investigations and counsel, but the Ethics Commission used only $4,500 of that amount.  If over the next six months it becomes clear that the Ethics Commission needs additional funding for outside investigations and counsel, this could be incorporated into their budget request for FY 2004.

8.  If it is determined that the Ethics Commission responsibilities should be shifted to the State, how would a transfer of responsibilities take place?

The PIC in its letter of August 27, 2002, stated that the state law is silent on any authority for local governments to return ethics oversight to State control and it would take action by the General Assembly to return New Castle County to the PIC’s jurisdiction. 

However, Senate Bill 406, adopted June 9, 1992 states:  “Any change to an approved code of conduct must similarly be approved by the State Ethics Commission to continue the exemption” from the State Code of Conduct.

There is some tension regarding the meaning of this statute.  The question of returning some or all ethics responsibility back to the PIC cannot move forward until there is further dialogue with the State in this area. 

9.  What items, if any (e.g. Ethics Commission records) would need to be provided to the State?

Records and all relevant paperwork should be provided to the State.  During the transfer, care must be taken to respect the confidentiality and sensitivity of the documents.  

10.  What are the costs/benefits of keeping the New Castle County Ethics Commission and Code of Conduct versus utilizing the State Public Integrity Commission & State Code of Conduct?  

IV. Recommendations

As was discussed previously, after examining all the available information and reviewing the State Code of Conduct and comparing it to the County Code, there are four key considerations that clearly rise above other considerations when determining how to address the future of a New Castle County Ethics Commission.  The four considerations are:

·        Maintaining (or potentially increasing) public confidence in New Castle County government ethics;

·        Keeping the financial disclosure requirement for County officials, appointees, and employees;

·        Ensuring that ethics policy-making, funding and implementation is independent from political influence;

·        Increasing the amount of education and training for County government regarding  ethics policy and financial disclosure requirements.

A.  Recommendations:

To maintain (or potentially increase) public confidence in New Castle County ethics and keep the financial reporting requirements intact:

• The County should appoint a new Ethics Commission in order to keep ethics monitoring at the most active and local level.  The functions of this Ethics Commission would be to maintain its current responsibility of administering and enforcing the Code of Conduct and financial disclosure requirements.

To ensure that ethics policy-making, funding and implementation is independent from political influence:

• Respectfully request that the PIC undertake regulation for Code of Conduct and financial disclosure purposes of those County officials that have the ability to impact ethics policy-making, funding and implementation.  These officials include County Council, the County Executive, the Chief Administrative Officer, the County Attorney and any General Managers that impact ethics policy-making, funding and implementation.  The total amount of officials and employees meeting this description is approximately 11-18 individuals. 

• The County should work with members of the General Assembly to pass a state law instituting a financial disclosure requirement for the above listed New Castle County officials similar to the existing County financial disclosure requirement, including requiring disclosure of real estate interests.

• For a New Castle County ethics commission, a panel of three to five advisors to Council and the County Executive should be formed to recruit, screen and recommend future members.  Since time is of the essence, it is recommended that Council maintain the current process of recruiting, identifying and selecting members of the Ethics Commission without the panel.[3]  However, the new Ethics Commission members’ terms should be staggered to provide the opportunity to use the new process and ensure that all Commission member appointments are not up for review at the same time.

To increase the amount of education and training on the County level regarding County ethics policy and financial disclosure:

• The Ethics Commission responsibilities should be revised to place a greater emphasis on educating and training County officials and employees on the requirements of the County ethics code, and the job description of its attorney should be revised to place a greater emphasis on proactive education and training of this group.

There are some additional recommendations that emerged during the research. If County Council decides to implement the above recommendations, the following should also be considered:

• The PIC should be approached soon to open a dialogue regarding this proposal. 

• The new Ethics Commission should retain responsibility for administering and enforcing the Code of Conduct and financial disclosure requirements in the interim for those officials and employees that it is proposed be monitored by the State.

• The new Ethics Commission staff should be required as part of the job description to offer “office hours” by working in the Government Center or another County office location fifteen to twenty hours/week, although any files should only be accessible to Commission staff. 

• Ethics funding allocated for outside investigations and counsel ($30,000 in FY 2003) should be shifted to fund a full-time attorney and ¼ - ½ dedicated staff assistant.  The basis for this recommendation is that the Ethics Commission was allocated $30,000 in FY 2002 for outside investigations and counsel, but only used $4,500 of that amount.  As a result, approximately $25,000 of the Ethics Commission funding for investigations and counsel went unused in FY 2002.

• County Council should review the revised Ethics process in winter 2003 for its effectiveness, accomplishments and efficiency with regards to the four considerations stated above.

V.  Conclusion

Council has expressed a strong desire to move forward quickly and time is of the essence.  Much of the groundwork for the above recommendations has already been laid; there is an existing Ethics Code and financial disclosure requirement in County law, the County has had an Ethics Commission for several years, and the funding already exists to address staffing and resource issues.  If Council decides to implement these recommendations, the next steps will be:  (1) working with the Public Integrity Commission to determine if they will take back monitoring responsibilities for the County Council, the County Executive, and selected general managers; (2) partnering with the County Executive to locate and appoint a new Ethics Commission; and (3) re-focusing the new Ethics Commission on education and training of County officials, appointees and employees.
 

Appendix:  New Castle County Ethics Commission Fact Sheet

According to the 2002 Annual Report:

• NCCo ethics code adopted in 1990, amended in 2000.

• Seven member commission—four members appointed by County Council and three appointed by County Executive.  Terms are three years.

• Meetings on certain topics are required by County code to be private.  All complaints are heard in executive session, while all requests for advisory opinions are held in executive session, unless the person requesting the opinion wants the session open.

• In 2001, the Commission met fifteen times and:

• Received and reviewed nine complaints and two confidential matters

• Discussed, researched and adopted 45 regulations to facilitate the processing of complaints, preliminary complaints and investigations of the Commission

• Considered eleven requests for advisory opinions; eight of which resulted in formal opinions being issued

• Developed and passed five regulations regarding Advisory Opinion procedures

• Published one copy of Ethics Update, the Commission newsletter to educate County officials and employees of their obligations under the Ethics Code

• Issued an educational memorandum on the acceptance of gifts by County officials and employees

• Reviewed 246 Statements of Financial Interest by County officials and employees.

• Due to amendments to the County Ethics Code in 2000, the Ethics Commission also in 2001:

• Increased its jurisdiction over the Code of Conduct nearly four-fold from approximately 450 County officials and employees to all County employees (approximately 1600).
• Reduced its jurisdiction for financial disclosure purposes from approximately  450 officials and employees to 246.  
• Reviewed many of its previous decisions dating from July 2000 due to the new restrictions on:
  • Post-employment for County employees,
  • Additional disclosure filings for County employees and officials who have financial interest in any private enterprise regulated by or in business with the County, and
  • Restrictions on County officials representing or otherwise assisting any private enterprise with respect to any matter before the County.

• Reviewed and amended with County Council the definition of “County official.”

• At the request of the County Law Department, participated in discussions on possible amendments to the Building Code addressing ethical issues and reviewed (and ultimately rejected) a proposal to only require elected officials’ financial statements be available to the public, as opposed to all statements as required now.