Date: June 10, 2024
To: Members of the Ethics Commission
From: Patrick Ford, Executive Director
Subject: Agenda Item 4 – Executive Director’s Report
Summary and Action Requested
This report provides various programmatic and operational highlights since the last report.
No action is required by the Commission, as this item is for informational purposes only.
Budget Update
The Mayor released her proposed City budget for FY25 and FY26 on May 31. Fiscal year 2025 covers the period July 1, 2024 to June 30, 2025 (FY25) and fiscal year 2026 covers the period July 1, 2025 to June 30, 2026 (FY26). This proposed budget includes funding for all of the Commission’s budget requests as described in our department’s budget letter, which we submitted to the Mayor’s office on February 21st. As a part of the budget submission process this year, City departments were required to propose cuts of 10% in FY25 and FY26, and an additional proposed contingency cut of 5%. Fortunately, the Mayor’s proposed budget for the Ethics Commission would not require these target cuts.
As part of the Commission’s budget submission, we requested a number of changes to the Commission’s staff positions to strengthen our programs and operations. All of them have been included in the Mayor’s proposed budget. They are:
- Reclassification of all positions in the Audit Division:
- 1824 Audit Manager position to 1686 Auditor III
- 1822 Auditor positions to 1684 Auditor II (Three positions)
- Reclassification of three positions in the Enforcement Division:
- Director of Enforcement from 0922 (Manager I) to 0923 (Manager II)
- 1823 Senior Investigative Analyst to 1824 Principal Investigative Analyst (Two positions)
- Approval to fill other positions which were previously held vacant due to budget constraints:
- 1844 Engagement & Compliance Officer
- 1844 Senior Management Assistant (reclassified from 1840 Junior Management Assistant)
- 1454 Executive Secretary
The Mayor’s Proposed Budget mentions our department’s total budget for FY25 as $14.3 million (page 197). However, that figure includes an allocation of $7.5 million for the Election Campaign Fund to support the City’s Public Campaign Financing Program. Our departmental operating budget as proposed is $6.8 million for FY25 and $7.3 million for FY26. For reference, the Commission’s FY24 operating budget is $7.1 million.
The City’s budget approval process is still ongoing, and now the Board of Supervisors (BOS) will begin their process of reviewing and approving the budget. The Ethics Commission’s departmental budget presentation at the BOS Budget and Appropriations Committee is scheduled for Wednesday, June 12. The final approvals on the City’s budget typically happen around August 1st, which is when we will have full confirmation of what our budget will be. I will keep you updated when we get closer to having a final approved budget.
Policy Updates
Charter Amendment Proposed to Create an Inspector General
On May 21, Board President Peskin and Supervisor Safai introduced a Charter amendment (File # 240549) that would establish the position of Inspector General within the Controller’s Office. This new position would be tasked with initiating and leading investigations regarding potential violations of laws or policies involving fraud, waste, abuse, or “misconduct” and would expand the authority of the Controller’s Office. Staff met with President Peskin’s Office about this proposal prior to it being introduced at the Board, and President Peskin revised the proposed measure based on feedback from Staff. We appreciate President Peskin’s willingness to meet with our office on this matter and to adjust the proposal based on our feedback.
However, despite the positive revisions that were made, it is still possible that the measure, if approved by voters, will cause unnecessary disruptions to investigations by the Ethics Commission, City Attorney, and District Attorney. The Inspector General’s role concerning the investigation of violations of the Campaign and Governmental Conduct Code and the Political Reform Act has not been properly defined in the measure as written. This creates the possibility that the Inspector General may separately investigate matters within the jurisdiction of the Ethics Commission, including matters that are already under investigation by the Commission.
Staff is continuing to monitor this proposal, and I will work with the Chair on drafting a comment letter for inclusion in the legislative file associated with the measure.
Board of Supervisors Hearing on Artificial Intelligence in Local Elections
On May 13, Staff participated in a hearing to discuss the use of artificial intelligence in local elections and explore what the City may wish to do to safeguard against such threats. The hearing was called by Supervisor Preston and occurred during a meeting of the Rules Committee. Staff have been meeting on this topic with Preston’s staff and were asked to present at the hearing, specifically to talk about the Commission’s enforcement processes and staffing, the City’s current disclaimer rules, and our thoughts regarding AI use in local elections. The main recommendations we made were for the City to 1) be mindful of the existing disclaimer requirements and their past legal challenges, 2) consider the various legislative initiatives at the State level and how potential local action would interact with the proposed State rule changes, and 3) provide sufficient funding for the staffing and technological resources that would be necessary to administer and enforce any new rules. We presented along with individuals from Common Cause and the Department of Elections (more info and the presentations are available here).
The Policy Division will continue to engage with Supervisor Preston’s office and other stakeholders on this issue and monitor developments in how artificial intelligence might affect the work of the Commission.
Campaign Finance Regulations Discussed at Board of Supervisors and Not Vetoed
In April, the Commission approved regulations regarding the City’s campaign finance rules. From the time the Commission approves regulations, the Board of Supervisors has 60 days to veto the regulations with a two-thirds vote, otherwise the regulations go into effect. Supervisor Ronen called for a hearing on these regulations that occurred during the May 13 meeting of the Rules Committee. During that hearing, Staff learned that most of the Committee’s concerns were based on misunderstanding the scope of the changes regarding fundraisers hosted in homes or offices. The regulations in question specify that if individuals are already prohibited from giving political contributions under local law, they also are prohibited from hosting home or office fundraisers. The Committee had mistakenly thought the regulations had a broader scope and would have removed the State’s exception for small home or officer fundraisers for everyone, not just those already prohibited from making contributions under local law. Staff attempted to clarify this during the hearing on May 13, but the Committee had outstanding questions and Supervisor Ronen made a motion to veto the proposed regulations regarding home and office fundraisers.
Prior to the full Board voting on the proposed veto on May 21, Staff sent a memo to the Board regarding the proposed regulations, which sought to address the questions and concerns raised by the Rules Committee. At the full Board meeting on May 21, Supervisor Ronen stated that the Staff memo sufficiently addressed her concerns and tabled the motion to veto the proposed regulations. The regulations will go into effect on June 11. The Engagement & Compliance Division will be preparing a notice for candidates and treasurers regarding the regulations going into effect this month.
Form 700 Legislation Approved by the Board of Supervisors
Ethics Commission staff have been working with Supervisor Chan’s Office and the City Attorney’s Office to promote legislation that will make it easier for City departments to have employees with purchasing authority under Proposition Q file their Form 700s, as is already required.[1] This legislation (File #240016) was unanimously approved by the Board of Supervisors on April 30 and will become effective on June 10. In addition to updating and clarifying the process for Form 700 filers with Proposition Q authority, the legislation also makes several non-substantive corrections to the Code. The Engagement & Compliance Division will be communicating to departmental filing officers about this legislation this month.
Biennial Conflict-of-Interest Code Review In Progress
The Political Reform Act requires every local governmental agency to review its Conflict of Interest Code every two years to determine if the agency’s list of Form 700 filers is still current or, alternatively, if the Code must be amended to update the list. The Code identifies the positions in each department/agency that are required to file the Form 700. These “designated filers” are required to file Form 700 on an annual basis, and within 30 days of assuming and leaving office. The list of filers contained within the code must be regularly updated to reflect any changes to the agency’s organizational structure.
Staff have been working with the Board of Supervisors and the City Attorney’s Office to get this year’s code review underway. The Engagement & Compliance Division will be communicating to departmental filing officers about this process this month and disseminating the 2024 Biennial Code Review Guide, which was developed by Staff. Departments are being asked to submit their proposed amendments to the Clerk of the Board and the City Attorney’s Office no later than August 30.
Form 700 Annual Deadline Update
Staff in the Engagement and Compliance division completed their administration of the 2024 annual filing deadline for the Form 700 Statement of Economic Interests. Aside from trainings, compliance materials, deadline reminders, and filer support, the annual deadline also requires staff to perform a review of annual Form 700 filings submitted by City officers. FPPC regulations require review of 20% of statements filed on time—at least half of which must be selected at random—and a review of all statements filed late. Staff selected 42 timely statements to review, reviewed an additional 42 statements selected randomly, and reviewed 35 late-filed statements.
Currently, only three City officers and 95 designated employees have not filed their annual Form 700 as of June 5, 2024. This is the result f significant efforts on the part of the Division to engage with filers both before and after the April 1st deadline to obtain compliance. Engagement and Compliance Staff also have worked extensively with departmental filing officers to ensure that they are aware of their obligations, which include updating each department’s list of Form 700 filers anytime a City employee is hired, changes position, or leaves City service. This work by filing officers is necessary to make the electronic disclosure program work properly, and engaging with departmental filing officers was a major priority in the administration of the program this year.
At this time, Engagement and Compliance has completed their work on the annual Form 700 filing. The Enforcement division will now begin their reviews for potential action for late filers and non-filers. Further updates on those efforts will be reported in the quarterly enforcement reports.
Additional information about the Engagement and Compliance Division and its Form 700 program will be presented under Agenda Item 10.
Staff News
Enforcement
On May 28th, Bisi Matthews began as the Commission’s next Director of Enforcement. Bisi will continue the ongoing work to expand and deepen the work of the Enforcement Division, including initiating more complex and impactful cases and proactively identifying violations.
Bisi joined the Commission as a senior investigator in October 2021. In that role, she worked on many important cases, secured a number of significant settlements, and helped redesign many of the division’s processes. Prior to joining the Commission, Bisi was a senior staff attorney with Bay Area Legal Aid, where she litigated tenant-landlord cases through both civil and administrative proceedings. Bisi has also served as a staff attorney at the Law Foundation of Silicon Valley and Manhattan Legal Services, and as a senior special investigator at the Office of the Inspector General for the New York City Police Department. Bisi earned her JD from Michigan State and her BA in Criminal Justice from John Jay College of Criminal Justice in New York.
During the recruitment period, Jeff Zumwalt served as Acting Director of Enforcement and ensured that the division’s operations were carried out with no disruption. Jeff has been an investigator with the Enforcement Division since July 2017 and has contributed to many of the division’s key initiatives. Jeff has now returned to his regular duties as a senior investigator.
Audits
On May 6th, Cesar Delgado was appointed to the Audit Manager position, which was vacant beginning on April 22nd. In this role, Cesar will provide leadership and support to the Audit Division to help ensure that its programs and operations are effective.
Cesar joined the Commission as an auditor in November 2021. He has over 20 years of experience as an Auditor with the Political Reform Audit Program at the California Franchise Tax Board, where he conducted audits of various state and local political entities. He also served previously as a Political Reports Specialist with a political law firm, where he filed required disclosure reports with state and local regulators.
[1] Proposition Q allows City department heads to delegate authority to certain City employees to approve purchases under $10,000 using City funds. Multiple conditions apply to the delegation and use of this authority, including that delegated “Prop Q” purchasers must file the Form 700. These requirements are promulgated by the City Administrator.