Public Service and Fiduciary Ethics Monday, September 17, 2012

1. Public Service and Fiduciary EthicsMonday, September 17, 2012 Presented By: Scarlet D. Hughes, M.S.W. San Joaquin County Public Guardian/Conservator

2. LEARNING OBJECTIVES • To become familiar with public service ethical concepts • To learn fiduciary duty concepts • To learn the distinctions between fiduciary duty and public service duty • To learn as a public servant you are held to a higher standard • To learn the importance of public perception regarding your ethics • To encourage thinking beyond legal restrictions Page 2

3. TABLE OF CONTENTS • Public Service Ethics • Principles of Public Service Ethics • Ethics vs. Ethics Laws • Universal Ethical Values • Values & Public Service • Responsibility & Public Service • Respect & Public Service • Loyalty & Public Service • Fiduciary Ethics • What is a Fiduciary? • Fiduciary Obligation Page 3

4. TABLE OF CONTENTS • Ethical Conflicts • Dilemmas • Ethical Conflict: Fiduciary Responsibility vs. Public Interest • Public Perception • “No Perks” Rules • Helpful Concepts • Questions/Comments/Corrections • Credits Page 4

5. Public Service Ethics Page 5

6. PRINCIPLES OF PUBLIC SERVICE ETHICS • Serving the Public Interest • Not personal interest • How does one know “The Right Thing to Do” • Laws are a guide • But only set minimum standards • Ethics laws set “required conduct” • Ethics law violations Page 6

7. ETHICS VS. ETHICS LAWSThe Same Thing? • Ethical considerations go beyond the law’s minimum requirements • Ethics is what we ought to do – not just what we have to do • Legal doesn’t necessarily mean ethical • Ethical behavior is governed by “values” Page 7

8. UNIVERSAL ETHICAL VALUES • Trustworthiness/Honesty • Fairness • Responsibility • Respect • Loyalty Page 8

9. VALUES & PUBLIC SERVICE • Trustworthiness • Be truthful - don’t knowingly use or give false or inaccurate information – keep your word • Avoid appearance of personal interest, bias, conflict of interest • Don’t accept gifts • Fairness • Merit based decisions • Agency policies applied consistently • Refrain from decisions when there is a conflict of interest Page 9

10. RESPONSIBILITY &PUBLIC SERVICE Responsibility Promote the efficient use of agency resources Do not use agency resources for personal or political benefit Represent your agency with professionalism, integrity, and appropriately as you are authorized to do Page 10

11. RESPONSIBILITY &PUBLIC SERVICE cont. • Take Responsibility for your own actions, even when it is uncomfortable to do so • Disclose suspected instances of impropriety • Do not disclose confidential information without proper legal authorization Page 11

12. RESPECT & PUBLIC SERVICE • Treat clients, family, public, peers and staff with courtesy, even when you disagree with them • Focus on merits, not personality traits • Solicit diverse opinions and build consensus, when appropriate • Follow through on commitments, keep others informed, and make timely responses • Be approachable and open-minded Page 12

13. LOYALTY & PUBLIC SERVICE Hierarchy of Ethical Duty: whose interest do you service first: Hint – Always the Client First Over: Co-workers/Sub-ordinates Supervisor Manager Director County Administrator Board of Supervisors Legislators Page 13

14. FIDUCIARY ethics Page 14

15. WHAT IS A “FIDUCIARY”? • Has the characteristics of trust • Should inspire a feeling of confidence • Requires “scrupulous good faith and candor” • Fiduciary laws are created to protect the less powerful, fortunate and/or sophisticated • Undertaking “to act primarily for another’s benefit” • Your fiduciary duty to the client always trumps public interest Page 15

16. WHAT IS A “FIDUCIARY”? cont. A “Fiduciary” has 3 general duties: • Loyalty–Maximizing the Conservatee’s or estate’s interests is primary (opposite of a “conflict of interest”) • Good Faith–Making the Conservatee’s or estate’s interests one’s own (opposite of “self dealing”) • There can be no “what do I get out of this?” • Care – Exercising the same care and prudence as you would for yourself (opposite of neglect/negligence) • Probate Code §9600(a)–“…ordinary care and diligence …” means layperson or ‘non-expert’, not a lower, standard of care. Page 16

17. FIDUCIARY OBLIGATION Performance Standards Contrasted: Fiduciary Duty – the highest level of care and due diligence; our constant goal Fiduciary Breach – not exercising loyalty, good faith and due care; failure = surcharge; Civil action-ability – engaging in carelessness or negligence; failure = loss of office; Criminal prosecution – engaging in gross negligence or willful malfeasance; failure = jail and/or fine. Page 17

18. ETHICAL CONFLICTS Page 18

19. ETHICAL DILEMMASTwo Common Types • Right vs. right • Situations where we believe there are two conflicting sets of "right" values • Torn between loyalty to someone or something and your responsibility to the client or public • Your responsibility to your client trumps the value of loyalty or friendship • Ethics requires you do what's right, regardless of the personal costs. Page 19

20. ETHICAL DILEMMASTwo Common Types • Personal Cost • Involves significant personal cost • Also called moral courage ethical dilemmas • Cost may be: • Financial – missed opportunity for financial gain • Emotional – such as a loss of a friendship • Social – loss of prestige, respect or social position • The answer is usually simple but not easy! Page 20

21. ETHICAL CONFLICT FIDUCIARY RESPONSIBILITY VSPUBLIC INTEREST Example of an ethical conflict between fiduciary duty and public service duties Fees – we have an public service obligation to not give a “gift of public funds” Indigent client owes fees – how aggressive should you be? Which obligation is highest? Your examples? Page 21

22. PUBLIC PERCEPTION • Not only an introspective process • We are stewards of the public’s trust • The public must have confidence that indeed the right thing has been done • The “right thing” is for the public to know that first the client’s and then the public’s interests are the guiding motivating factors in a public employees’ actions. • Err on the side of, when in doubt – don’t • Ask yourself the hard questions Page 22

23. “NO PERKS” RULES Underlying Principles • Statement of Economic Interests (Form 700) • Democratic notion that public servants should be treated just like everyone else • Should not receive special benefits beyond the compensation provided by law • The “no-perk” rules fall into two basic categories: • Perks that others offer you, and • Perks that you give yourself because of your access to and decision-making discretion over the use of public resources Page 23

24. HELPFUL CONCEPTS First, Some Thoughts: Fiduciary obligations do not naturally “flow” from societal norms They are created by the law to protect the less powerful, fortunate and/or sophisticated from those who might take advantage of them. Thus, “avoiding the appearance of improprieties” is an important concern Page 24

25. HELPFUL CONCEPTS Demonstrating care, loyalty and good faith are critical, yet these ideals are hard to visualize and implement at the operational level Standardization and consistency help! Page 25

26. HELPFUL CONCEPTS Operational Controls That Can Help: Dual Custody – requiring two people be present when carrying out key duties-  Witnesses  Back-up Segregation of Duties – splitting work (especially work involving financial transactions) among diverse staff No Delegation of Duties to Outsiders! Page 26

27. HELPFUL CONCEPTS More Operational Controls That Can Help: Policies and Procedures – conforming performance to consistent standards Screening/Background Checks –  Deputies/Staff/Vendors Physical Controls – pre-numbered bags, vault access, numbered cable ties, etc. Page 27

28. HELPFUL CONCEPTS More Operational Controls That Can Help: Use your County Counsel! Document, Document, Document! (Especially financial transactions!) Notice, Notice, Notice! Independent Audits Recourse to the Courts (petition for instructions on noticed hearing) Page 28

29. Questions?Comments?Corrections? Page 29

30. Credits Craig Hendrickson, MBA, JD, Los Angeles County PA; a very special thank you for the use of his ethics training materials State of California – Department of Justice, Office of the Attorney General; AB 1234 Ethics Training Page 30