An audit of how San Jose analyzes personal financial disclosures from its key decision makers has begun to change how the city looks for corruption — drawing accolades from a statewide good government group that says San Jose could set an example for other cities with its newly proactive approach.
California’s Political Reform Act specifically requires conflict of interest disclosures from “…mayors, city managers, city attorneys, city treasurers, chief administrative officers and members of city councils…” as well as candidates for elected office. The forms include details about the individual’s income, investments, businesses and real estate holdings, among other things.
The intent of the law, as it pertains to the city’s recent audit, is to prevent government corruption via transparency — and set up ways for localities to identify potential conflicts of interest — and steer clear of them.
To that end, the state’s government ethics law — which was adopted in 1974 in the wake of Watergate and updated frequently since — also requires disclosures from individuals responsible for “…the making or participation in the making of decisions which may foreseeably have a material effect on any financial interest.”
That includes a plethora of people who work for the city in various capacities, not just as elected officials and public employees but also those who serve on appointed boards and commissions and private consultants.
It’s up to local governments to identify which employees, contractors and appointed officials make decisions for the city that could be influenced by their personal financial interests. And then it’s up to those individuals to honestly disclose that information to the public — and recuse themselves from any decisions that might give rise to a conflict of interest.
In San Jose, the city’s Conflict of Interest Code spells out who is required to make financial disclosures and that code is also periodically updated to include new job descriptions and titles. But according to the audit, the real problem is not with employees and board members — 96% of whom filed their annual 2018 disclosures within two months of the deadline.
Instead, the problem lies with contractors. The audit showed that outside consultants filed the required disclosures only 83% of the time — and less than half submitted the right paperwork when they stopped working for the city.
The disclosures, called a Form 700, must be filed every April with the City Clerk’s office and periodically at the start and end of a job that requires it.
City Clerk Toni Taber told San José Spotlight the vast majority of city employees file the required forms by the deadline and almost every employee and board member files after just one or two gentle reminders. Taber added that most have nothing to report on their Form 700s.
The City Clerk and City Auditor Joe Rois agree their biggest concern is contractors who vanish — even if they filed their starting disclosure and annual Form 700s — without submitting the final paperwork.
“Currently, identifying those who must file (when) assuming office is clear, as the names are usually included in the contract,” Taber wrote in her response to the audit report. “However, the Office of the City Clerk is not notified when those identified in the contract leave the company.”
After that, “They’re gone,” Taber told San José Spotlight. “They’re in the ether.”
And Taber said the contractor may simply assign a different employee to do the work — meaning that the city doesn’t get the required forms for the departing contract employee, or the incoming one.
Rois had two recommendations for solving the issue. The first requires the city to change its contract management system to make contractors responsible for letting the Clerk’s Office know which employees have to file disclosures and notify the city of any staffing changes. The other is to simply require alternate contact information from those contract employees, who currently only list their work email address.
In her official response to the audit report, Taber wrote that she supported those recommendations and later noted that those suggestions in particular were directed at officials outside her office.
“It’s a lot less work for me when everyone files on time,” Taber said.
Taber assigned a staffer to track down delinquent contractors back in May, and that staffer is still contacting some of those people through social media profiles and basic internet research.
And the City Clerk’s Office implemented several of the auditor’s recommendations even before the report was released.
For example, Taber said, an auditor suggested her office use its new Form 700 filing system to generate automated reports regularly for each city department — to review for potential conflicts of interest. It was an easy task, but it was something the Clerk’s Office hadn’t thought to do on its own, Taber said.
“That’s the beauty of the audit,” Taber said “They are looking at it with outside eyes. We do get used to a certain way of doing things and an outside perspective can help break us out of that.”
Rey López-Calderón, executive director of good government group California Common Cause, praised the city for being more vigilant about conflicts of interest — particularly the audit’s recommendation of issuing regular reports on employee Form 700s to be reviewed within city departments.
“These disclosures are not particularly useful if no one is reviewing them,” López-Calderón said. “It should be the policy of cities and counties to have staff to review these documents. That would be the gold standard.”
Unfortunately, many local governments simply collect the required forms and pass them along to the state — but that means San Jose could raise the standards, López-Calderón continued, “San Jose could be a model for the rest of the state if they jump to the next level perhaps by adding resources to make sure that the reports are actually read and conflicts of interest are actually managed.”
You can view Form 700s for San Jose officials here.
Contact Adam F. Hutton at [email protected] or follow @adamfhutton on Twitter.