...At the meeting of the Task Force held on March 13, 2002, City Attorney Robert Shannon stated his opinion that no councilmember had acted unlawfully or in bad faith in allocation of funds, but suggested that discretionary funds violated the spirit of the City Charter and the Municipal Code budget process. He raised concerns about the process involved in the award of such funds, including insufficient public input. Members of the public spoke both in favor and against discretionary funds. Written communications on the topic were also received. The Task Force then assigned the topic to the already established Campaign Activity Committee for further review.
The committee’s recommendation was to "adopt comprehensive regulations for discretionary funds. . . or end all discretionary funds"." The committee’s report (see Appendix D) summarized the concerns that a very serious perception exists that discretionary
funds are used by council members for campaign or political advantage, but also noted that
funds had been used for worthwhile projects.
The entire Task Force considered the topic and extensively discussed the committee’s
report. The Task Force debated whether a decision regarding the existence of discretionary
funds is a policy issue for the Council and Mayor rather than an ethical issue which fell within the scope of the Task Force’s assignment. Ultimately, the Task Force, by a majority, adopted the committee’s recommendations for specific regulations regarding discretionary funds.
The Task Force did not decide and did not recommend whether discretionary funds should be abolished or continued. Many members on the Task Force argued strongly that the funds should, indeed, end and, as noted, that was the committee’s alternative recommendation to regulation. There was a spirited debate. It was argued that the funds, while going to good causes, created so much potential for "mischief," gave the appearance of impropriety, and took up so much time at City Council meetings that any benefit that the funds yielded was lost.
Others suggested that the funds were a means of getting city monies to small community
groups involved in worthwhile causes that could not or would not otherwise access city funds
if they were required to participate in the bureaucracy of the budget process. It should be
noted that the Task Force discussions occurred contemporaneously with ongoing City Council
and mayoral elections and considerable publicity in the local press regarding the concurrent
award of discretionary funds by incumbent City Council members who were running for office.
The eleven recommendations adopted by the Task Force to regulate discretionary
funds, if existent, include:
1. Limitation on Recipients. Limits should be made for who (or what organiza-tions)
are eligible to apply for discretionary funds. For example, eligible groups
may include charitable organizations tax-exempt under 501(c)(3) of the Internal
Revenue Code, neighborhood associations in Long Beach, or city departments.
2. Written Applications. Written applications should be required describing
specifically how the money would be spent and when the program/ project will
be completed. An application must include:
(a) Name and background of proposed recipient
(b) Project description
(c) Expected benefits
(d) Project time frame
(e) Person responsible for the total project
3. District Meetings. Applications for funds should be discussed at a public
meeting held in each council district to discuss the merits of the applications
received. The City Councilmember who represents the district should preside
over the meeting, which may be held in a town hall format.
4. Final Report. At the completion of each project, a final report should be
submitted that certifies the objectives were met and provides an accounting for
all funds.
5. Status Reports. If the project lasts longer than six months, then semi-annual
reports should be required until all funds are spent and a final report is
completed and filed.
6. Council Approval/Discussion. All proposed discretionary fund disbursements
should be listed as an "action item" on the City Council agenda so they may be
discussed by the Council and be subject to public comment.
7. Audit Procedures. The City Auditor or the Department of Financial Manage-ment
should be given jurisdiction to audit all discretionary fund allocations to
ensure they were spent as appropriated. Audits should be conducted on a
specified number of recipients (e.g., 15% of the total each year), on allocations
for large amounts (e.g., over $5,000), on allocations where, after review of the
final report, discrepancies are found, or any other auditing procedures that
makes sense.
8. Public Disclosure of Projects. The City Clerk must maintain a list of all funding
approvals (e.g., project description, amount, current status). This list should be
included on the City web page.
9. Timing for Allocations. Discretionary funds should be approved only at certain
meetings, either quarterly or monthly (subject to black-out period, see below).
10. Black-Out Period. Approval or disbursement of discretionary funds should be
prohibited within 90 days before and 60 days after a city election (including
special elections), whether or not the councilmember proposing the allocation
is up for re-election.
11. Voter Ratification. Although discretionary funds may not violate the letter of
the law, some believe it violates the spirit. Therefore, within the next year, Long
Beach voters should have the issue presented to them, whether in the form of
an advisory vote or actual change to the City Charter or Municipal Code. Only
after the voters have approved the method and limits of discretionary funds will
the practice be made legitimate.
