Kentucky gets D+ grade in 2015 State Integrity Investigation

Toughened laws, but yawning gaps in oversight remain

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Update, December 1, 2015, 6:00 p.m.: Due to a correction to the data in another state, Kentucky's rank has changed to tied for 9th overall.

A month after starting to investigate Kentucky’s Agriculture Department, state Auditor Adam Edelen called a meeting for his team to update each other on the transgressions of ex-Ag Commissioner Richie Farmer.

Auditors took turns sharing revelations at that February 2012 get-together about how Farmer, a former University of Kentucky basketball hero, ordered his agency’s employees to build a basketball court in his backyard. He had them drive him on hunting trips so he could shoot deer from the passenger window. Dating back to 2004, he stocked his agency’s personnel ranks with relatives, cronies and, just before his term expired, his girlfriend. And Farmer, the auditors found, used public funds on unnecessary hotel stays, Christmas gifts and laptops, refrigerators and Remington rifles that disappeared from the department.

“A lot of jaws dropped,” Edelen said of that meeting.

Farmer was sentenced in January 2014 to 27 months in federal prison for violating ethics and personnel laws. The fact that his indiscretions went unchecked for most of the eight years he spent in office is emblematic of why Kentucky earned a grade of D+ in the 2015 State Integrity Investigation, an assessment of state government accountability and transparency conducted by the Center for Public Integrity and Global Integrity.

Kentucky scored a 67, placing the Bluegrass State tied for 9th place nationally. That’s lower than Kentucky’s 71 score on the first State Integrity Investigation, released in 2012. But the two scores are not directly comparable because of changes made to improve and update the project and methodology, such as eliminating the category for redistricting, a process that generally occurs only once every 10 years.

Kentucky fared well, especially compared to other states, in some categories, including its system of political financing. The state imposes a $1,000 limit on individual contributions to candidates and bans corporate contributions. New laws passed in 2014 bar legislators from accepting any donations from lobbyists.

Kentucky also is fifth nationally in legislative accountability. That lofty ranking stems in part from tightened ethics laws, which the legislature also updated in 2014 to ban lawmakers from accepting even a cup of coffee from lobbyists.

But while the laws are among the nation’s toughest, Kentucky also faces an enforcement gap — a substantive difference between the strength of the laws on the books and the rigor with which they’re implemented.

For instance, no one audits legislative financial disclosure forms. The Legislative Ethics Commission has maintained for years a staff of four full-time employees and an enforcement counsel who is brought in on a contractual basis for cases. This summer, the office has operated with only three employees due to a vacancy. But even when fully staffed, much of the commission’s focus is on providing advice for legislators, as opposed to investigating them. And in those rare instances the panel sanctions lawmakers for violations, the penalty is usually a few thousand dollars.

Former Democratic Rep. W. Keith Hall is perhaps the most vivid illustration of Kentucky’s mixed record on ethics enforcement. Hall owned several businesses, including a coal mine. He failed to list one company he owned on his financial disclosure, but that omission was spotted by a journalist, not by the ethics commission. On the other hand, the Energy and Environment Cabinet’s inspector general caught him in a scheme to bribe a state mine inspector. In June 2015, a federal jury convicted Hall on bribery charges.

And then there’s Farmer, the former agriculture commissioner, whose saga was the most prominent example of public corruption to come out during the project’s study period from January 2013 through March 2015.

The fact that a state official could so egregiously violate the public trust for so long reflects how the Executive Branch Ethics Commission and the other ethics and personnel watchdog agencies are woefully understaffed and underfunded, forcing them to be more reactive than proactive, said Edelen, the auditor.

Separate silos        

Kentucky’s strict separation of powers can be one of its strengths, allowing each branch of government to serve as a check on the others’ actions. But it also has meant that each branch primarily is responsible for policing the ethics of its employees, and no one else’s.

When it comes to reviewing the financial books, the Auditor of Public Accounts has the authority to dig into all executive branch agencies and local government agencies and has expanded its reach over the last decade to conduct special audits of airport and library boards and school districts.

But that constitutional separation of powers prevents the auditor’s office from looking into the books of the legislative and judicial branches, leaving them effectively unchecked by state regulators. Such limitations led to one of Kentucky’s lowest standings in the category of “Internal Auditing” – tied for 45th in the nation.

Kentucky also has separate systems to manage pensions – one for teachers, another for state workers and one covering legislators and judges. Each has its own governance structure and rules for disclosing investment decisions and fees, which has led to dramatic differences in how transparent and well funded those systems are.

Lack of transparency

One of the signature features of Kentucky’s Capitol in Frankfort is its open design, which allows visitors to stand on third floor outside of the House of Representatives’ chamber and look across the building to simultaneously see what’s happening in the Senate. From that same spot, they can see judicial leaders’ offices on the second floor and even catch a glimpse of the first-floor rotunda that’s adjacent to the governor’s office.

But that transparency often fails to transcend the architecture. 

Kentucky was one of 44 states receiving failing grades in “Access to Information.” Legislators, for instance, have exempted their written communications and their calendars from being subject to open records requests. And a 1995 court decision allows the governor to shield his schedule from the public.

The Kentucky Supreme Court in 1978 issued a ruling that effectively exempted the judicial branch from open records laws, leaving it to the discretion of the chief justice.

The current chief justice, John D. Minton Jr., has chosen to comply with information requests for all court operations. He said the idea of issuing a permanent rule governing court transparency is something “we’re going to be looking at.”

Most executive agencies do comply with open records request. But the most glaring exception is the Health and Family Services Cabinet.

Jon Fleischaker, a First Amendment attorney at Dinsmore & Shohl in Louisville — who helped write Kentucky’s Open Records laws in the 1970s — has fought the cabinet on behalf of Kentucky’s largest newspapers since 2011 to gain release of documents from fatal abuse cases involving children under the supervision of state social workers. A circuit judge admonished the agency for having “willfully circumvented” the law.    

Fleischaker chalks this sort of behavior up to the imperfection of a human system, one that cannot fully protect against deceit, which is why enforcement becomes so vital. When summing up such shortcomings, he might as well have been describing Richie Farmer, W. Keith Hall and others who have violated Kentucky’s ethics, campaign and pension governance rules.        

“You can write the perfect law,” he said, “but that won’t stop those who are determined to break it.”

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