Each year, Oklahoma legislators and statewide elected officials must report details about their personal finances to alert the public to potential conflicts of interest.
This year, however, they generally will be asked to report fewer facts than ever – that is, since the disclosure rules were approved in 1994.
The Oklahoma Ethics Commission has revised the disclosure form and slashed the number of state employees required to file it, from nearly 6,000 to 362. Only legislators, statewide elected officials and judges must file the form, with agency heads and other state workers exempt.
Those who must file don’t have to reveal as many potential sources of income outside of their state jobs. They, their spouses and dependents have to report other income only if it brought in $20,000 or more. Last year, the minimum was $5,000.
Unlike before, they also don’t have to disclose all contracts they have with a state agency or all income-producing relationships with registered lobbyists. And as for stocks, they can keep all of them private unless the percentage of shares owned in a company or the dividends and income earned exceed a certain sizable level.
One thing that hasn’t changed is public access. Citizens and media still can’t view the disclosure forms on the state website. Ethics Commission members decided not to post them online after some elected officials expressed concern about identity theft. Even a portion of the form is not viewable on the site, although the site indicates whether a public official has filed the most recent form.
Joey Senat, communications chair of nonprofit Freedom of Information Oklahoma, said the new disclosure rules reflect a trend of the Legislature toward less transparency, starting with its self-exemption from the Open Records Act.
“If they didn’t think that kind of information would anger the public or make the public more suspicious, then the trend wouldn’t be toward lessening the amount of information – it would be making more information available and more easily available,” Senat said.
Ashley Kemp, executive director of the Ethics Commission, defended the new rules and forms and said overall they require more information than they have in the past, including the addresses of entities for which other income is earned by the filer, spouse or dependents.
“There wasn’t a lot of information you could necessarily get from the forms to help identify if employees or officials had conflicts of interests,” she said. “The forms just weren’t used, and the media wasn’t asking for them.”
Revised Forms, Fewer Filers
In mid-2015, the Ethics Commission devoted part of at least five monthly meetings to discussing a revision of financial disclosure rules; public officials, news reporters and commission members offered varying opinions. The commission concluded that the disclosure forms were burdensome, confusing and seldom utilized. They were also inconsistently filled out. Rules revising the form and requiring fewer people to file them were approved, to take effect on July 1, 2016.
The commission decided to limit filing to statewide elected officials, district and appellate judges, and Supreme Court justices. Not required to file now are thousands of non-elected state officers and employees, including the governor’s cabinet-level appointees, such as secretaries of state, finance, health and human services, veterans affairs and tourism, as well as candidates for state executive, legislative and judicial offices. Heads of departments of transportation, corrections, taxes, health and mental health also are exempt.
“It (the previous form) really required a lot more individuals to file than were really necessary or useful,” Kemp said. She called the number of filers a “pretty large administrative nightmare” for the Ethics Commission and other agencies.
The commission also revised the form so that it potentially elicits less information about personal finances.
Corporation Commissioner Bob Anthony, first elected in 1988, said he has seen disclosure rules evolve over the years to become less meaningful.
“I know from having done this through the years that it’s been highly simplified, and the information is asked for in aggregation form, and so certainly it doesn’t disclose as much as it used to,” he said. “I think … that it probably can be and should be more demanding, which is not to say that I think every person holding office should disclose every penny everywhere.”
Some states’ forms require more information than Oklahoma’s – names of creditors and debtors, for example. Other states require about the same or less. More than half of states post their forms on their websites. The Ethics Commission rejected the idea, citing lawmakers’ concerns about identity theft. The form includes a work phone number and email and mailing addresses, but not information commonly associated with identity theft, such as social security numbers, bank account information or birth dates. Birth dates were removed in 2015.
Insurance Commissioner John Doak said he agrees with the commission’s decision.
“As a member of the (National Association of Insurance Commissioners) cybersecurity task force, I’ve seen what can happen when personal financial information gets into the wrong hands,” Doak said in a written statement to Oklahoma Watch. “We must be diligent in protecting such sensitive information.”
The forms are made available to the public and news media through an Open Records Act request, but relatively few citizens file such requests. The lack of online access prevents a quick check of public officials’ forms just after or before new bills are proposed or voted on in the Legislature or in reaction to news developments during election campaigns.
Striking a Balance
A primary goal of the disclosure forms now, Kemp said, is to ensure that newly elected officials understand conflicts of interest. The new forms begin with a series of statements that officials must acknowledge, including that they know they can’t use their office for private gain and they’ve read the state’s rules on conflicts of interest.
Kemp said the forms balance transparency and privacy, particularly considering the number of Oklahomans who serve in unpaid roles on state boards and commissions and who formerly had to file disclosure forms.
“We didn’t want a financial disclosure form to have a chilling effect,” she said.
Corporation Commissioner Dana Murphy brought up the tension between public service and private life.
“I think it’s hard for people who pass these laws to determine what information should the public know, yet what should be private,” she said. “Should the requirements be to bare everything I have? If you did that, no one would ever want to run for office.”
In Senat’s view, those who serve even on state boards and commissions undertake a serious responsibility and are obligated to share things that could potentially influence their decision-making.
“They are certainly not volunteers,” Senat said. “They are taking on a role that is far more than going down to a nonprofit and volunteering.”
Income and Investments
On the previous form, state employees were required to identify their private employer and names of other entities from which they, their spouse or dependents received at least $5,000. The new form moves the threshold at $20,000, including for the filer’s current private employer. Adjusted for inflation, the new amount is more than double the original $5,000 set in 1994.
Kemp said that in general, the new form offers more transparency than forms in past years. Before 2015, spouses and dependents only had to report work they directly did for state agencies or on behalf of clients who had business before state agencies, but not private-sector employment or investments.
Even before the forms were revised, a limited amount of information was required when it came to securities and LLCs.
Under the current system, officials can own an LLC without disclosing it if the entity’s income doesn’t meet the $20,000 threshold. House Speaker Charles McCall, R-Atoka, listed one such LLC, SE Aero, on his 2015 disclosure when the threshold was $5,000, providing no details. Secretary of State filings show the LLC is registered in McCall’s name. A call to McCall’s office was necessary to get more information. McCall’s spokesman Jason Sutton said SE Aero was created to operate a family-owned Piaggio aircraft, and McCall is a minority owner of the plane. The LLC does not make any money, Sutton said.
For securities, the new form requires disclosure only if the official owns at least 5 percent of a company’s shares or earns dividends or income of $50,000 or more for the year. Previously, state employees had to disclose all securities whose value – not just dividends and income – was $5,000 or more.
The 2015 disclosure for Lt. Gov. Todd Lamb listed two entities that provided him with at least $5,000 a year: CLS and JBZ. He wrote “brokerage” next to CLS, offering no details. An LLC, JBZ Investments, is registered with the state in Lamb’s name. Reached by phone, Keith Beall, Lamb’s chief of staff, identified CLS as CLS Group, an Edmond land management company where Lamb worked as general counsel and now serves on the board. JBZ is a royalty income account from when Lamb worked as a land man, Beall said.
The 2015 disclosure form for Labor Commissioner Melissa McLawhorn-Houston said that she owned stock, with no further information. When asked for more details, she said in a statement the stock was “a small amount” that she received as a gift.
Doak reported on his 2015 form that he had investments in “various securities” but did not name them. When asked for additional information, he said in a written statement that he had investments in publicly traded mutual funds and stocks.
Retirement accounts and mutual funds don’t have to be reported if the filer, spouse or dependents don’t control specifically how the money is invested.
Enforcement Is Rare
Some state officials said the state has rarely, if ever, taken action against a public official for falsifying or intentionally omitting information on a financial disclosure form.
The Ethics Commission, Attorney General’s office and State Auditor’s office do not review all financial disclosure forms for accuracy, although the forms can become part of other investigations, spokespeople for the agencies said.
Kemp noted that the six-person Ethics Commission doesn’t have the personnel to investigate the forms’ contents.
If a lawmaker leaves off information required to be reported, the commission won’t know unless it receives a complaint or tip.
Former Sen. Ralph Shortey, who resigned recently after he was charged with child prostitution, reported no income outside of his state job on his 2015 disclosure form. However, campaign finance records show that Shortey’s political consulting firm, Precision Strategy Group, earned $6,094 during 2015. Shortey could not be reached for comment on the apparent discrepancy.
The commission can bring a civil lawsuit in district court for violations, which could result in penalties ranging from $5,000 to $100,000. Kemp said she was unaware of the commission taking that kind of action for a financial disclosure violation.
Referring to the honor-system nature of disclosure rules, Kemp said: “I would hope they want to follow the law. My experience is they always do, and if they have questions about what needs to be included, they call and ask.”
Contact reporter Mollie Bryant at (405) 990-0988 or firstname.lastname@example.org.