2006 APPA BUSINESS AND FINANCIAL CONFERENCE

2006 APPA BUSINESS 2006 APPA BUSINESS AND FINANCIAL AND FINANCIAL CONFERENCE CONFERENCE

How KUA Drafted Its Code of How KUA Drafted Its Code of Ethics and Its ImplementationEthics and Its Implementation

September 19, 2006September 19, 2006

Arthur J. “Grant” Lacerte Jr.Arthur J. “Grant” Lacerte Jr.Vice President and General CounselVice President and General CounselKissimmee Utility AuthorityKissimmee Utility Authority1701 W. Carroll Street, 1701 W. Carroll Street, Kissimmee Florida, 34741Kissimmee Florida, [email protected](407) 933-7777(407) 933-7777

Roadmap for discussion Roadmap for discussion

Why and how did we come up with Why and how did we come up with KUA’s Code of Ethics? (Part I)KUA’s Code of Ethics? (Part I)

Major components of the Code (Part Major components of the Code (Part II)II)

How it’s been Implemented (Part III)How it’s been Implemented (Part III)

Conclusion (How has it worked so far Conclusion (How has it worked so far and do we need one?) (Part IV)and do we need one?) (Part IV)

2006 APPA BUSINESS AND 2006 APPA BUSINESS AND FINANCIAL CONFERENCEFINANCIAL CONFERENCE

Why and how did KUA come up with Why and how did KUA come up with a Code of Ethics? (Part I)a Code of Ethics? (Part I)

Why and How did we come up with KUA’s Code of Ethics? Why and How did we come up with KUA’s Code of Ethics? (Part I)(Part I)

Had already revised KUA’s policies on gifts in Had already revised KUA’s policies on gifts in response to well-publicized lapses by response to well-publicized lapses by procurement officials in other Florida cities. procurement officials in other Florida cities. Try to remove ambiguity in policy.Try to remove ambiguity in policy.

Implemented Whistleblower Mechanism for Implemented Whistleblower Mechanism for Financial Reporting at Request of External Financial Reporting at Request of External Auditors to account for Auditors to account for Sarbanes-OxleySarbanes-Oxley..

Later, General Manager approached Board Later, General Manager approached Board with developing a more general Code of with developing a more general Code of Ethics.Ethics.

Board charged staff with drafting and Board charged staff with drafting and recommending a Code of Ethics.recommending a Code of Ethics.

How did we come up with KUA’s Code of How did we come up with KUA’s Code of Ethics? (continued) (I)Ethics? (continued) (I)

Surveys were distributed to Surveys were distributed to measure employees’ measure employees’ understanding of existing policies understanding of existing policies relating to ethics and to seek their relating to ethics and to seek their input on what KUA’s Code of Ethics input on what KUA’s Code of Ethics should look likeshould look like

KUA employee survey on ethicsKUA employee survey on ethics Survey Questions:Survey Questions:

(1)(1) What should the KUA code look What should the KUA code look like?: like?: (general principles, general principles (general principles, general principles plus illustrations, general principles, illustrations plus illustrations, general principles, illustrations and detailed Code of Conductand detailed Code of Conduct))

(2)(2) How familiar are you with KUA’s How familiar are you with KUA’s current policies regarding current policies regarding ethical conduct (favors, ethical conduct (favors, acceptance of gifts, nepotism acceptance of gifts, nepotism etc.) contained in KUA’s etc.) contained in KUA’s Personnel Manual?Personnel Manual?

KUA Survey on Ethics (I)KUA Survey on Ethics (I)

(3) How helpful is the Personnel Manual to (3) How helpful is the Personnel Manual to you for addressing ethical issues?you for addressing ethical issues?

(4) Are you aware that KUA has an Ethics (4) Are you aware that KUA has an Ethics Compliance Counselor to assist Compliance Counselor to assist employees in resolving ethical employees in resolving ethical dilemmas?dilemmas?

(5) Briefly describe what improvements (5) Briefly describe what improvements could be made to the Personnel Manual could be made to the Personnel Manual to assist you in addressing ethical issues to assist you in addressing ethical issues at KUA?at KUA?

KUA Survey on EthicsKUA Survey on Ethics

(6) How often do you face ethical dilemmas in (6) How often do you face ethical dilemmas in your work?your work?

OftenOften SometimesSometimes Hardly everHardly ever NeverNever

(7) Please circle 5 values from the following (7) Please circle 5 values from the following list of values that you think KUA stands for?list of values that you think KUA stands for?

(8) Please make or list any other comments or (8) Please make or list any other comments or issues involving ethics not addressed issues involving ethics not addressed above.above.

KUA Survey On Ethics (I)KUA Survey On Ethics (I)

Survey Results: KUA should stand Survey Results: KUA should stand for for honesty, trustworthiness, honesty, trustworthiness, dependability, accountability dependability, accountability and respectand respect

Code was drafted to incorporate Code was drafted to incorporate and aspire to these valuesand aspire to these values

2006 APPA BUSINESS AND FINANCIAL 2006 APPA BUSINESS AND FINANCIAL CONFERENCECONFERENCE

Major components of the Major components of the Code (Part II) (excerpts)Code (Part II) (excerpts)

THREE COMPONENTS OF CODETHREE COMPONENTS OF CODE

1.1. Declaration of Core PrinciplesDeclaration of Core Principles

Kissimmee Utility Authority recognizes that its Kissimmee Utility Authority recognizes that its services fulfill an imperative public need. KUA is services fulfill an imperative public need. KUA is dedicated to operating in an accountable, dedicated to operating in an accountable, dependable and trustworthy manner while dependable and trustworthy manner while showing compassion and respect to all. Therefore, showing compassion and respect to all. Therefore, KUA’s actions must meet the highest standards of KUA’s actions must meet the highest standards of integrity and honesty.integrity and honesty.

Code Itself (II)Code Itself (II)22::General Statement and Guideline on General Statement and Guideline on ResponsibilitiesResponsibilities

This Code of Ethics provides overall guidance in This Code of Ethics provides overall guidance in meeting our ethical obligations. It is incumbent upon meeting our ethical obligations. It is incumbent upon KUA Board members and staff to accept KUA Board members and staff to accept personal personal responsibilityresponsibility for exercising good, sound judgment for exercising good, sound judgment while meeting KUA’s high ethical standards. while meeting KUA’s high ethical standards.

This responsibility includes This responsibility includes familiarity with all of familiarity with all of KUA’s policies and proceduresKUA’s policies and procedures, including , including departmental, purchasing, travel and/or personnel departmental, purchasing, travel and/or personnel policies and procedures, as they apply to each policies and procedures, as they apply to each individual’s functions and activities. This individual’s functions and activities. This responsibility also includes compliance with all responsibility also includes compliance with all applicable laws and regulations including the Code of applicable laws and regulations including the Code of Ethics for Public Officers and Employees set forth in Ethics for Public Officers and Employees set forth in Florida Statutes, Chapter 112, Part III. Florida Statutes, Chapter 112, Part III.

Code Itself (II)Code Itself (II)

3:3: Utilization of Ethics Compliance Utilization of Ethics Compliance

Counselor and ManagementCounselor and Management

To facilitate compliance with this Code of To facilitate compliance with this Code of Ethics, KUA has appointed an Ethics Ethics, KUA has appointed an Ethics Compliance Counselor (see Personnel Manual). Compliance Counselor (see Personnel Manual). Consult with management or the Ethics Consult with management or the Ethics Compliance Counselor (Compliance Counselor (anonymouslyanonymously, if , if desired) when confronting an ethical dilemma desired) when confronting an ethical dilemma or needing an answer to an ethics question. or needing an answer to an ethics question.


IMPLEMENTATION: Part IIIIMPLEMENTATION: Part III

In one word: In one word: TrainingTraining

IMPLEMENTATION (TRAINING) PART IIIIMPLEMENTATION (TRAINING) PART III

Trained all 300 employees – 6 Different Trained all 300 employees – 6 Different SessionsSessions

Training Broken into 5 General SectionsTraining Broken into 5 General Sections

1. Introduce Employees to new Code of 1. Introduce Employees to new Code of EthicsEthics

2. Revisit and Cross-Reference Code with 2. Revisit and Cross-Reference Code with Relevant Relevant KUA Policies and Florida Statutory Code KUA Policies and Florida Statutory Code of Ethics for of Ethics for Public Officers and EmployeesPublic Officers and Employees

3. Discuss Concept of Ethics in General3. Discuss Concept of Ethics in General

4. Present and Discuss Hypothetical 4. Present and Discuss Hypothetical Dilemmas Dilemmas

5. Question and Answer5. Question and Answer


Examples of KUA policies we Cross-Examples of KUA policies we Cross-referenced with Code: referenced with Code:

(1) Gifts, (1) Gifts,

(2) Procurement/Purchasing, (2) Procurement/Purchasing,

(3) Travel, (3) Travel,

(4) Conflicts of Interest, (4) Conflicts of Interest,

(5) Harassment, (5) Harassment,

(6) Supervisor/Subordinate Relationships, (6) Supervisor/Subordinate Relationships,

(7) Nepotism, (7) Nepotism,

(8) Florida Statutory Code of Ethics for (8) Florida Statutory Code of Ethics for Public Officers and Employees, andPublic Officers and Employees, and

(9) Use of ratepayer property (e.g. vehicles)(9) Use of ratepayer property (e.g. vehicles)


(EXCERPTS FROM TRAINING PRESENTATION)(EXCERPTS FROM TRAINING PRESENTATION)

KNOW the Travel Policy – how you account for KNOW the Travel Policy – how you account for expenses: proper handling of receipts, what expenses: proper handling of receipts, what KUA does not reimburse (alcohol, tobacco), KUA does not reimburse (alcohol, tobacco), putting personal items on KUA credit cardputting personal items on KUA credit card

KNOW the Purchasing Policy – what kind of KNOW the Purchasing Policy – what kind of expenses are acceptable and what level requires expenses are acceptable and what level requires Vice President, President and/or Board approvalVice President, President and/or Board approval

KNOW your department’s policies regarding KNOW your department’s policies regarding conduct, use of leave and safety – reporting conduct, use of leave and safety – reporting requirements, including accuracyrequirements, including accuracy


(EXCERPTS FROM TRAINING PRESENTATION) (EXCERPTS FROM TRAINING PRESENTATION)

How do we utilize the Code of Ethics?How do we utilize the Code of Ethics?

““Apply What You know about the Code, Apply What You know about the Code, policies and law to Situations at Work:policies and law to Situations at Work:

Refer back to Code, policies and Standards of Refer back to Code, policies and Standards of Conduct – review which rule or standard Conduct – review which rule or standard applies to your situationapplies to your situation

Exercise good judgment consistent with the Exercise good judgment consistent with the Code of Ethics, policies and legal Code of Ethics, policies and legal requirementsrequirements

When in doubt seek help from management When in doubt seek help from management or Ethics Compliance Counselor BEFORE or Ethics Compliance Counselor BEFORE MAKING A DECISION – This can be done MAKING A DECISION – This can be done anonymously”anonymously”



The third part of the training The third part of the training addressed the issue: addressed the issue:

““What is Ethics? – Resolving What is Ethics? – Resolving Ambiguities”Ambiguities”

And posed the question:And posed the question:

HOW DO YOU DEFINE ETHICS?HOW DO YOU DEFINE ETHICS?


Black’s Law Dictionary defines Ethics Black’s Law Dictionary defines Ethics as follows:as follows:

“ “ Of or relating to moral action, conduct, Of or relating to moral action, conduct, motive or character . . . Professionally motive or character . . . Professionally right or befitting; conforming to right or befitting; conforming to professional standards of conduct.”professional standards of conduct.”

Is there a difference between being Is there a difference between being professional and being moral? (general professional and being moral? (general question for conference participants)question for conference participants)


The fourth part of the Training posed The fourth part of the Training posed several hypothetical several hypothetical ethical ethical dilemmasdilemmas

We asked the employee attendees We asked the employee attendees for their responses and I will ask you for their responses and I will ask you to help me by participatingto help me by participating

– – HYPOTHETICAL ETHICAL HYPOTHETICAL ETHICAL DILEMMAS - DILEMMAS -

(1) An employee of a vendor that (1) An employee of a vendor that has done business with KUA for has done business with KUA for the past twenty years has tickets the past twenty years has tickets to a Magic playoff game and has to a Magic playoff game and has invited you to go. The tickets invited you to go. The tickets have a face-value of $50 but the have a face-value of $50 but the game is sold-out and tickets on game is sold-out and tickets on the street are fetching $150 from the street are fetching $150 from illegal scalpers. Can you accept illegal scalpers. Can you accept her invitation?her invitation?

– – HYPOTHETICAL ETHICAL DILEMMAS -HYPOTHETICAL ETHICAL DILEMMAS -

(2) Same facts as above, but the vendor (2) Same facts as above, but the vendor is still in the competitive award process is still in the competitive award process on a KUA project or is otherwise trying on a KUA project or is otherwise trying to convince KUA to do business with it to convince KUA to do business with it and you are in a position to make a and you are in a position to make a decision, recommendation or take decision, recommendation or take action on such purchase or contract.action on such purchase or contract.

Answer: It wouldn’t matter if the face value Answer: It wouldn’t matter if the face value of the ticket were $25 and the arena were of the ticket were $25 and the arena were half-empty. KUA employees in the above half-empty. KUA employees in the above situation cannot accept social courtesies situation cannot accept social courtesies from vendors who are in the pre-award from vendors who are in the pre-award competitive bidding process or are otherwise competitive bidding process or are otherwise trying to secure a contract with KUA.trying to secure a contract with KUA.

– – HYPOTHETICAL ETHICAL HYPOTHETICAL ETHICAL DILEMMAS - DILEMMAS -

(3) A friend or relative has just (3) A friend or relative has just moved to the Kissimmee area. Her moved to the Kissimmee area. Her credit rating requires that she credit rating requires that she furnish a deposit upon signing up for furnish a deposit upon signing up for KUA services and she asks you to see KUA services and she asks you to see if KUA would waive the deposit.if KUA would waive the deposit.

Answer: This presents a conflict of Answer: This presents a conflict of interest for the employee and the interest for the employee and the employee must decline the request.employee must decline the request.

– – HYPOTHETICAL ETHICAL DILEMMAS -HYPOTHETICAL ETHICAL DILEMMAS -

(4) You find out that a fellow employee (4) You find out that a fellow employee for whom you have a great deal of regard for whom you have a great deal of regard has been arrested for a first offense DUI has been arrested for a first offense DUI outside Osceola County. He tells you this outside Osceola County. He tells you this in confidence. You and he both know that in confidence. You and he both know that a conviction could jeopardize his position a conviction could jeopardize his position at KUA and that he drives a KUA vehicle at KUA and that he drives a KUA vehicle on a regular basis. He indicates to you on a regular basis. He indicates to you that he does not intend to inform KUA that he does not intend to inform KUA management of his DUI because of the management of his DUI because of the risk of losing his job. He asks that you risk of losing his job. He asks that you keep the DUI a secret? What should you keep the DUI a secret? What should you do?do?


Next we Presented the Ethics Code to the Next we Presented the Ethics Code to the Board of Directors for a Training Session:Board of Directors for a Training Session:

We presented the Code, referenced our We presented the Code, referenced our policies and the law, discussed the policies and the law, discussed the ambiguity of the Ethics Concept and ambiguity of the Ethics Concept and addressed dilemmasaddressed dilemmas

But, training had a different focus – less But, training had a different focus – less focus on supervisory issues, more on focus on supervisory issues, more on Sunshine LawSunshine Law issues issues



Open Meetings Act RequirementsOpen Meetings Act Requirements Florida Statutes and Florida Supreme Court Florida Statutes and Florida Supreme Court

precedent consider the following a public meeting:precedent consider the following a public meeting:

AnyAny gathering whether formal or casual of 2 gathering whether formal or casual of 2 or more members of a public body to discuss or more members of a public body to discuss a matter on which a matter on which foreseeableforeseeable action will be action will be takentaken



STICKY SITUATIONSSTICKY SITUATIONS::

- Conferences – In Town and Out of - Conferences – In Town and Out of TownTown

- Informal, social gatherings- Informal, social gatherings

- Charitable Events (non-KUA business)- Charitable Events (non-KUA business)

- Letters and Emails where board - Letters and Emails where board members copied (not including special members copied (not including special meeting or emergency meeting notices meeting or emergency meeting notices attaching agenda but not inviting attaching agenda but not inviting response or comment)response or comment)


((EXCERPTS FROM TRAINING PRESENTATIONEXCERPTS FROM TRAINING PRESENTATION))

Newspaper commentary/Media’s Newspaper commentary/Media’s perspective:perspective:

Discuss: Column by Orlando Discuss: Column by Orlando Sentinel’s Mike LaffertySentinel’s Mike Lafferty



TAKE THE ACT VERY SERIOUSLY – TAKE THE ACT VERY SERIOUSLY – violations include criminal penalties violations include criminal penalties and firestorms of criticism in the and firestorms of criticism in the public arena. Perfectly well-meaning public arena. Perfectly well-meaning people can run afoul of the Sunshine people can run afoul of the Sunshine requirements. Any doubt don’t requirements. Any doubt don’t discuss, don’t meet with the other discuss, don’t meet with the other member and/or remove yourself from member and/or remove yourself from the situation.the situation.


For the Board we addressed a fifth For the Board we addressed a fifth hypothetical ethical dilemma:hypothetical ethical dilemma:

(5)(5) You are attending a conference. You are attending a conference. At your table another attendee is At your table another attendee is seated between you and another KUA seated between you and another KUA board member. That person throws board member. That person throws out for general discussion at the table out for general discussion at the table an All Requests Project matter that an All Requests Project matter that involves KUA. What do you do?involves KUA. What do you do?


CONCLUSION: HOW HAS THE CODE WORKED SO FAR AND CONCLUSION: HOW HAS THE CODE WORKED SO FAR AND DO WE REALLY NEED ONE?DO WE REALLY NEED ONE?

ChallengesChallenges::

Underutilized? Underutilized?

Anonymous Mechanism Susceptible to Abuse? Anonymous Mechanism Susceptible to Abuse? (no accountability for filing frivolous, even badly (no accountability for filing frivolous, even badly motivated complaints) motivated complaints)

Who should be the Ethics Compliance Officer Who should be the Ethics Compliance Officer (ECO)?(ECO)?

How should ECO handle groundless complaints?How should ECO handle groundless complaints?

Dissemination: Sign-up – video for all new Dissemination: Sign-up – video for all new employeesemployees

CONCLUSION: HOW HAS THE CODE WORKED CONCLUSION: HOW HAS THE CODE WORKED SO FAR AND DO WE REALLY NEED ONE?SO FAR AND DO WE REALLY NEED ONE?

Do We Really Need One?Do We Really Need One?

Sarbanes-Oxley and the impetus to reform Sarbanes-Oxley and the impetus to reform from ENRON debacle: highlight some of S-from ENRON debacle: highlight some of S-O mandatesO mandates

Issues with Preferences, Supervisor help, Issues with Preferences, Supervisor help, conflicts of interestconflicts of interest

Strongly recommend: you see “The Strongly recommend: you see “The Smartest Guys in the Room”Smartest Guys in the Room”


Resources:Resources: other utility codes, including other utility codes, including

Sacramento Municipal Utility District Sacramento Municipal Utility District also: also:

““Creating A Workable Company Code of Creating A Workable Company Code of Ethics” by the Ethics Resources Center, Ethics” by the Ethics Resources Center, Washington, DC (202) 737-2258 – if Washington, DC (202) 737-2258 – if you’re looking to develop one I highly you’re looking to develop one I highly recommend purchasing this manualrecommend purchasing this manual


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2006 APPA BUSINESS AND FINANCIAL CONFERENCE

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