Muzzle That Watchdog

Sometimes you hear something that sets off alarm bells. Take for instance the changes being considered for the Executive Branch Ethics Commission. Most of the changes are probably for the best, will generate some more paperwork for bureaucrats and be generally ignored unless someone does something incredibly stupid.

But one line got my attention.

The commission shall be attached to the Finance and Administration Cabinet for administrative purposes only.

This is the kind of thing that makes the hair rise on the back of my neck and makes me utter a Jon Stewart “WTF” at 7:30 in the morning.

So what does “for administrative purposes only” mean. According to Kentucky Revised Statues (KRS) there are already seven agencies attached to the Finance and Administration for “administrative purposes”.

42.016 Corporate bodies and instrumentalities attached to Office of Secretary.

The following corporate bodies and instrumentalities of the Commonwealth shall be attached to the Office of the Secretary for administrative purposes and staff services:
(1) State Property and Buildings Commission;
(2) Kentucky Savings Bond Authority;
(3) Kentucky Turnpike Authority;
(4) State Investment Commission;
(5) Kentucky Housing Corporation;
(6) Kentucky Tobacco Settlement Trust Corporation; and
(7) Kentucky River Authority.

(There is not a link for the Kentucky Savings Bond Authority because I couldn’t find one. This looks like a do nothing board for spreading a little political patronage. If anyone has any information on this agency let me know.)

And the above list can be modified by the Governor at anytime with an Executive Order like this one from Ernie Fletcher.

Finance and Administration Cabinet
The following organizational units are attached to the Finance and Administration Cabinet: Office of Financial Management, Office of the Controller, Department for Administration, Department of Facilities Management, State Property and Buildings Commission, Kentucky Pollution Abatement Authority, Kentucky Savings Bond Authority, Deferred Compensation Systems, Office of Equal Employment Opportunity and Contract Compliance, Office of Capital Plaza Tower Operations, County Officials Compensation Board, Kentucky Employees Retirement System, Commonwealth Credit Union, State Investment Commission, Kentucky Housing Corporation, Governmental Services Center, Kentucky Local Correctional Facilities Construction Authority, Kentucky Turnpike Authority, Historic Properties Advisory Commission, Kentucky Tobacco Settlement Trust Corporation, Eastern Kentucky Exposition Center Corporation, State Board for Proprietary Education, the Governor's Office of Technology, Department of Property Valuation, Department of Tax Administration, Office of Financial and Administrative Services, Department of Law, and Department of Information Ombudsmen.

Jonathan Miller is the Secretary of the Finance Cabinet. According to KRS the Secretary of Finance is the chief financial officer.

42.012 Secretary as state's chief financial officer.
The secretary of the Finance and Administration Cabinet shall be the chief financial officer of the state and the adviser of the Governor and the General Assembly in financial matters, and shall at all times protect the financial interests of the state.

Here is the question:

If the Ethics Commission is attached for “administrative purposes” will it be treated like the other agencies that are attached for “administrative purposes”, and more importantly just what does “administrative purposes” mean?

Is the answer, depends on the agency and how much control we want to exercise.

We would hope that Secretary of Finance’s involvement with the Executive Ethics Commission would be minimal but looking at what the other attached agencies do and how they function the Secretary’s involvement doesn’t appear to minimal.

For instance:

The December 2007 Monthly Investment Report of the State Investment Commission prominently displays Miller’s name on the cover of the report. The report details the monthly status of billions of state dollars. One would think the chief financial officer would be deeply involved with an agency that manages billions of dollars.

The June 30, 2007 audit of the Kentucky Housing Corporation shows the following:

Net assets of the Corporation’s governmental activities increased from $7.0 million to $8.2 million. All assets of the Corporation’s governmental activities are restricted for program purposes. Assets subject to immediate disbursement are classified as current liabilities and remaining assets are classified as restricted net assets (fund balances). The increase in net assets indicates that revenues received from other governments exceeded program grants, operating expenditures and transfers.

The net assets of the Corporation’s business-type activities increased from $249.9 million to $253.2 million. The Corporation’s primary business-type activity is the bond-financed loan program.

So we are not talking billions here, just hundreds of millions. Again, would the chief financial officer limit his involvement in how this money is managed?

Of course if the Secretary of Finance isn’t interested in billions, then a few hundred million in highway debt or another few hundred million in property debt would hardly be a blip on the radar.

Does it make any sense to put a watch dog agency like the Executive Ethics Commission under the same roof as the people that manage multiple billions of dollars?

Where do you think the biggest opportunity to be unethical is at? With a line worker in a county office of some agency or with people managing billions of dollars.