2006 APPA BUSINESS AND FINANCIAL CONFERENCE

1. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE How KUA Drafted Its Code of Ethics and Its Implementation September 19, 2006 Arthur J. “Grant” Lacerte Jr. Vice President and General Counsel Kissimmee Utility Authority 1701 W. Carroll Street, Kissimmee Florida, 34741 glacerte@kua.com (407) 933-7777

2. Roadmap for discussion • Why and how did we come up with KUA’s Code of Ethics? (Part I) • Major components of the Code (Part II) • How it’s been Implemented (Part III) • Conclusion (How has it worked so far and do we need one?) (Part IV)

3. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE • Why and how did KUA come up with a Code of Ethics? (Part I)

4. Why and How did we come up with KUA’s Code of Ethics? (Part I) • Had already revised KUA’s policies on gifts in response to well-publicized lapses by procurement officials in other Florida cities. Try to remove ambiguity in policy. • Implemented Whistleblower Mechanism for Financial Reporting at Request of External Auditors to account for Sarbanes-Oxley. • Later, General Manager approached Board with developing a more general Code of Ethics. • Board charged staff with drafting and recommending a Code of Ethics.

5. How did we come up with KUA’s Code of Ethics? (continued) (I) • Surveys were distributed to measure employees’ understanding of existing policies relating to ethics and to seek their input on what KUA’s Code of Ethics should look like

6. KUA employee survey on ethics • Survey Questions: • What should the KUA code look like?: (general principles, general principles plus illustrations, general principles, illustrations and detailed Code of Conduct) • How familiar are you with KUA’s current policies regarding ethical conduct (favors, acceptance of gifts, nepotism etc.) contained in KUA’s Personnel Manual?

7. KUA Survey on Ethics (I) (3) How helpful is the Personnel Manual to you for addressing ethical issues? (4) Are you aware that KUA has an Ethics Compliance Counselor to assist employees in resolving ethical dilemmas? (5) Briefly describe what improvements could be made to the Personnel Manual to assist you in addressing ethical issues at KUA?

8. KUA Survey on Ethics (6) How often do you face ethical dilemmas in your work? • Often • Sometimes • Hardly ever • Never (7) Please circle 5 values from the following list of values that you think KUA stands for? (8) Please make or list any other comments or issues involving ethics not addressed above.

9. KUA Survey On Ethics (I) • Survey Results: KUA should stand for honesty, trustworthiness, dependability, accountability and respect • Code was drafted to incorporate and aspire to these values

10. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE Major components of the Code (Part II) (excerpts) THREE COMPONENTS OF CODE 1. • Declaration of Core Principles • Kissimmee Utility Authority recognizes that its services fulfill an imperative public need. KUA is dedicated to operating in an accountable, dependable and trustworthy manner while showing compassion and respect to all. Therefore, KUA’s actions must meet the highest standards of integrity and honesty.

11. Code Itself (II) 2: General Statement and Guideline on Responsibilities • This Code of Ethics provides overall guidance in meeting our ethical obligations. It is incumbent upon KUA Board members and staff to accept personal responsibility for exercising good, sound judgment while meeting KUA’s high ethical standards. • This responsibility includes familiarity with all of KUA’s policies and procedures, including departmental, purchasing, travel and/or personnel policies and procedures, as they apply to each individual’s functions and activities. This responsibility also includes compliance with all applicable laws and regulations including the Code of Ethics for Public Officers and Employees set forth in Florida Statutes, Chapter 112, Part III.

12. Code Itself (II) 3: • Utilization of Ethics Compliance Counselor and Management • To facilitate compliance with this Code of Ethics, KUA has appointed an Ethics Compliance Counselor (see Personnel Manual). Consult with management or the Ethics Compliance Counselor (anonymously, if desired) when confronting an ethical dilemma or needing an answer to an ethics question.

13. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE IMPLEMENTATION: Part III In one word: Training

14. IMPLEMENTATION (TRAINING) PART III Trained all 300 employees – 6 Different Sessions Training Broken into 5 General Sections 1. Introduce Employees to new Code of Ethics 2. Revisit and Cross-Reference Code with Relevant KUA Policies and Florida Statutory Code of Ethics for Public Officers and Employees 3. Discuss Concept of Ethics in General 4. Present and Discuss Hypothetical Dilemmas 5. Question and Answer

15. IMPLEMENTATION (TRAINING) PART III Examples of KUA policies we Cross-referenced with Code: (1) Gifts, (2) Procurement/Purchasing, (3) Travel, (4) Conflicts of Interest, (5) Harassment, (6) Supervisor/Subordinate Relationships, (7) Nepotism, (8) Florida Statutory Code of Ethics for Public Officers and Employees, and (9) Use of ratepayer property (e.g. vehicles)

16. IMPLEMENTATION (TRAINING) PART III (EXCERPTS FROM TRAINING PRESENTATION) • KNOW the Travel Policy – how you account for expenses: proper handling of receipts, what KUA does not reimburse (alcohol, tobacco), putting personal items on KUA credit card • KNOW the Purchasing Policy – what kind of expenses are acceptable and what level requires Vice President, President and/or Board approval • KNOW your department’s policies regarding conduct, use of leave and safety – reporting requirements, including accuracy

17. IMPLEMENTATION (TRAINING) PART III (EXCERPTS FROM TRAINING PRESENTATION) How do we utilize the Code of Ethics? “Apply What You know about the Code, policies and law to Situations at Work: • Refer back to Code, policies and Standards of Conduct – review which rule or standard applies to your situation • Exercise good judgment consistent with the Code of Ethics, policies and legal requirements • When in doubt seek help from management or Ethics Compliance Counselor BEFORE MAKING A DECISION – This can be done anonymously”

18. IMPLEMENTATION (TRAINING) PART III • (EXCERPTS FROM TRAINING PRESENTATION) The third part of the training addressed the issue: “What is Ethics? – Resolving Ambiguities” And posed the question: • HOW DO YOU DEFINE ETHICS?

19. IMPLEMENTATION (TRAINING) PART III • Black’s Law Dictionary defines Ethics as follows: “ Of or relating to moral action, conduct, motive or character . . . Professionally right or befitting; conforming to professional standards of conduct.” Is there a difference between being professional and being moral? (general question for conference participants)

20. IMPLEMENTATION (TRAINING) PART III • The fourth part of the Training posed several hypothetical ethical dilemmas • We asked the employee attendees for their responses and I will ask you to help me by participating

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

22. – HYPOTHETICAL ETHICAL DILEMMAS - • (2) Same facts as above, but the vendor is still in the competitive award process on a KUA project or is otherwise trying to convince KUA to do business with it and you are in a position to make a decision, recommendation or take action on such purchase or contract. • Answer: It wouldn’t matter if the face value of the ticket were $25 and the arena were half-empty. KUA employees in the above situation cannot accept social courtesies from vendors who are in the pre-award competitive bidding process or are otherwise trying to secure a contract with KUA.

23. – HYPOTHETICAL ETHICAL DILEMMAS - • (3) A friend or relative has just moved to the Kissimmee area. Her credit rating requires that she furnish a deposit upon signing up for KUA services and she asks you to see if KUA would waive the deposit. • Answer: This presents a conflict of interest for the employee and the employee must decline the request.

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

25. IMPLEMENTATION (TRAINING) PART III Next we Presented the Ethics Code to the Board of Directors for a Training Session: We presented the Code, referenced our policies and the law, discussed the ambiguity of the Ethics Concept and addressed dilemmas But, training had a different focus – less focus on supervisory issues, more on Sunshine Law issues

26. IMPLEMENTATION (TRAINING) PART III • (EXCERPTS FROM TRAINING PRESENTATION) • Open Meetings Act Requirements • Florida Statutes and Florida Supreme Court precedent consider the following a public meeting: Any gathering whether formal or casual of 2 or more members of a public body to discuss a matter on which foreseeable action will be taken

27. IMPLEMENTATION (TRAINING) PART III • (EXCERPTS FROM TRAINING PRESENTATION) STICKY SITUATIONS: - Conferences – In Town and Out of Town - Informal, social gatherings - Charitable Events (non-KUA business) - Letters and Emails where board members copied (not including special meeting or emergency meeting notices attaching agenda but not inviting response or comment)

28. IMPLEMENTATION (TRAINING) PART III (EXCERPTS FROM TRAINING PRESENTATION) • Newspaper commentary/Media’s perspective: Discuss: Column by Orlando Sentinel’s Mike Lafferty

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

30. IMPLEMENTATION (TRAINING) PART III For the Board we addressed a fifth hypothetical ethical dilemma: • (5)You are attending a conference. At your table another attendee is seated between you and another KUA board member. That person throws out for general discussion at the table an All Requests Project matter that involves KUA. What do you do?

31. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE CONCLUSION: HOW HAS THE CODE WORKED SO FAR AND DO WE REALLY NEED ONE? Challenges: • Underutilized? • Anonymous Mechanism Susceptible to Abuse? (no accountability for filing frivolous, even badly motivated complaints) • Who should be the Ethics Compliance Officer (ECO)? • How should ECO handle groundless complaints? • Dissemination: Sign-up – video for all new employees

32. CONCLUSION: HOW HAS THE CODE WORKED SO FAR AND DO WE REALLY NEED ONE? Do We Really Need One? • Sarbanes-Oxley and the impetus to reform from ENRON debacle: highlight some of S-O mandates • Issues with Preferences, Supervisor help, conflicts of interest • Strongly recommend: you see “The Smartest Guys in the Room”

33. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE • Resources: • other utility codes, including Sacramento Municipal Utility District also: • “Creating A Workable Company Code of Ethics” by the Ethics Resources Center, Washington, DC (202) 737-2258 – if you’re looking to develop one I highly recommend purchasing this manual

34. 2006 APPA BUSINESS AND FINANCIAL CONFERENCE QUESTIONS