Massachusetts Financial Disclosures – Weak and Out of Reach

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In the last five years, 250 public servants in Massachusetts faced charges for crimes or ethics violations, according to the Center for Public Integrity (CPI), which rated Massachusetts a D+ on legislative accountability. In an interview with the CPI, George Brown, former chairman of the State Ethics Commission, attributed this dismal grade to a political culture that puts itself above the law. The state’s high rate of ethical lapses and low legislative accountability grade are by-products of our inadequate government transparency laws and policies.

A key ingredient of government transparency is the Statement of Financial Interests (SFIs) elected officials and other policy-making appointees are required to file annually. When the thoroughness of or public access to SFIs is wanting, a less informed public and shadier decision-making are the natural result.

Of the 3,800 officials who file annual financial disclosures, 200 are legislators. These lawmakers, subject to the rigors of an election, have already received some measure of public scrutiny. Appointees face no such scrutiny, which makes financial disclosures the only window citizens have to assess potential conflicts of interest in their policy-making capacity.

Disclosures Uncovered

  1. Home values and income

The forms themselves have some very apparent shortcomings. Though Massachusetts was a national leader in integrity legislation when it created its State Ethics Commission in 1978, its SFI forms have not changed since then. Perhaps the threshold of $100,000 as highest bracket of income and home value was relevant 37 years ago, when the average household income and home value were $17,000 and $54,800, respectively. Today, this maximum bracket acts as an iron curtain, with 181 of Massachusetts’ 182 home-owning legislators reporting their homes in the ambiguous maximum bracket in 2011, according to Commonwealth magazine. Does that tell us anything?

Massachusetts is not alone. For income disclosures, only 10 states offer greater specificity than Massachusetts; only eight do when it comes to home value.

  1. Debt  

Debt disclosures are also limited. Although any outstanding debt of more than $1,000 must be disclosed along with dollar amounts, debt can remain unreported if it relates to an exempted category such as credit card debt, educational loans, and medical and dental expenses, to name a few. Disclosed debts of spouses and immediate family members require no dollar amounts. Because of these exceptions, convicted former House Speaker Sal DiMasi and his wife were able to refrain from disclosing their consumer debt, which amassed to $275,000 by 2007 according to testimony by federal auditor Andrea Roller. Prosecutors at DiMasi’s case argued that this debt likely drove him to take illegal payoffs. Had the Massachusetts SFI been stronger, the debt could have raised red flags in the public eye before DiMasi’s corruption scandal. Under financial disclosure requirements in 22 states, DiMasi and his wife’s indebtedness would have been in the public domain.

Another weakness of SFI requirements is lack of client disclosure. A case in point is the investigation into Senator Brian Joyce’s alleged conflicts of interest as a lawyer-legislator. Joyce, who sits on the joint committee regulating energy, allegedly had an ongoing business relationship with Energi, an energy insurance firm. Joyce allegedly approached state regulators on the company’s behalf and supported legislation backed by the company. Perhaps if SFI’s required disclosure of these activities, Joyce wouldn’t be in this predicament. After all, Justice Brandeis once cast electric light as the “most efficient policeman”.

Nationally, 26 states have some form of client disclosure requirements in some form. For legislators, who often supplement their legislative income by representing clients in the private sector, such disclosure would further promote public trust.

  • Accessibility

In addition to these inadequacies of SFI’s themselves, public access to them is woefully lacking. On the question of how easily citizens can access the asset disclosure records of state legislator members, the Center for Public Integrity found that Massachusetts outperforms only 18 states. The chief reason for this inaccessibility is the commonwealth’s refusal to offer financial disclosures on the Internet, as 29 states have already done. The State Ethics Commission’s states:

The law provides that any individual who submits a written request to the Commission can inspect and copy any Statement of Financial Interests. The Commission must forward a copy of any such request to the person whose Statement has been examined.

Not only is the process burdensome, it discourages public requests for SFI’s.   How many people would request them knowing that the filer, typically in a position of some power, could contact them and question their motives? In this environment, few SFI’s are accessed – in 2009, only 3 percent of filed financial disclosures were requested, according to The Boston Globe.

CPI found that Massachusetts outranks only 10 states in turnaround time for providing forms to requesters. Though the turnaround is usually quick, it is only so for small requests. When CommonWealth magazine requested the financial disclosure forms of all 3,800 public employees who file yearly, it was told to expect a wait of “a number of months” and that it would have to pay over $14,000 to have the request filled.

Where costs are concerned, the CPI awarded Massachusetts a misleading score of 100 percent, a score awarded to 30 other states as well. It is true that financial disclosure forms are offered to the public for free electronically if the filer has submitted them electronically. However, 15-20 percent of filers do not utilize the electronic method. When hard copies are requested, administrative costs are pushed to the requestor and can be prohibitive. CommonWealth paid the bill, uploaded all SFI documents for the years 2008 through 2012 to their website, allowing them to be seen at no cost to the viewer. We applaud CommonWealth, but shouldn’t the state be doing this?

  1. Moving Forward

The 29 states that post their disclosure forms online offer them at no charge and in such a manner that they can be amassed in large quantities to better facilitate data gathering and analysis.

Massachusetts’ subpar access to Statement of Financial Interest forms is primarily attributable to its lack of an online database, and such a database cannot exist because current law requires requestors to show identification and filers to be notified when their forms are requested. With the ongoing modernization of filing systems, Massachusetts, once a national leader in ethics regulations, is now a laggard.

Representative Carolyn Dykema has filed a bill requiring the State Ethics Commission to post financial disclosures online. The bill is a step in the right direction, but access without quality would not solve the problem. In addition to online access, SFIs themselves warrant substantial reform. Such reform would not require new legislation. Rather, it could be achieved by the five-member Ethics Commission alone. The Commission would be wise to target their efforts at current shortcomings in the disclosure of income, debt, and private-sector clientele. Such an overhaul of our financial disclosure methods would be a rational way to restore the public’s confidence in its officials, especially in light of many recently publicized ethical scandals.


Photo credit: kozumel Foter CC BY-ND