Conflict of Interest Codes for State & Local Agencies
Why Government Agencies Must Adopt a Conflict of Interest Code
The Political Reform Act (Act) prohibits a public official from using his or her official position to influence a governmental decision in which he or she has a financial interest. Every state and local agency must adopt a conflict of interest code that identifies all officials and employees within the agency who make governmental decisions based on the positions they hold. The individuals in the designed positions must disclose their financial interests as specified in the agency’s conflict of interest code.
To help identify potential conflicts of interest, the law requires public officials and employees in designated positions in a conflict of interest code to report their financial interests on a form called Statement of Economic Interests (Form 700). The conflict of interest codes and the Form 700s are fundamental tools in ensuring that officials are acting in the public’s best interest and not their own.
The Fundamentals of a Conflict of Interest Code
A conflict of interest code must:
- Provide reasonable assurance that all foreseeable potential conflict of interest situations will be disclosed or prevented;
- Provide to each affected person a clear and specific statement of his or her duties under the conflict of interest code; and
- Adequately differentiate between designated employees with different powers and responsibilities.
The Three Components of a Conflict of Interest Code
- Incorporation Section (Terms of the Code) - This section designates where the Form 700s are filed and retained (i.e., the agency or the FPPC). This section also must reference Regulation 18730, which provides the rules for disqualification procedures, reporting financial interests, and references the current gift limit. A sample is available here.
- List of Designated Positions - The code must list all agency positions that involve the making or participation in making of decisions that “may foreseeably have a material effect on any financial interest.” This covers agency members, officers and employees, and it may include volunteers on a committee if the members make or participate in making government decisions.
- Detailed Disclosure Categories - A disclosure category is a description of the types of financial interests officials in one or more job classifications must disclose on their Form 700s. The categories must be tailored to the financial interests affected, and must not require public officials to disclose private financial information that does not relate to their public employment.
The Codes Must be Regularly Updated
It is essential and legally required that an agency’s conflict of interest code reflects the current structure of the agency and properly identifies all officials and employees who should be filing a Form 700. To ensure the codes remain current and accurate, each agency is required to review its conflict of interest code at least every other year - state agencies in odd-numbered years and local agencies in even-numbered years.
The Process to Adopt or Amend a Code
The process for adopting or amending a conflict of interest code depends on whether it is a code for a state or local agency. For detailed information on the process: