| by Faisal Khan and Hannah Manion

Most public and elected officials, from the president to local representatives, are required to disclose their financial standing and sources of income to the public. The purpose of this requirement is to thwart corruption, prevent possible conflicts of interest and ensure government officials are working in the interest of the public good and not for personal gain.

Overall, it’s basic good government practice.

What public officials are required to disclose varies from state to state and city to city. But despite Chicago’s long history of corruption, its disclosure requirement is seriously lacking when compared to other similar large cities.

Recent cases of corruption in the Windy City show the urgent need for strong financial disclosure policies for every elected official. For example, former Chicago Public Schools CEO Barbara Byrd-Bennett was recently sentenced to 4.5 years in prison for getting kickbacks for steering contacts from CPS to her former employer, SUPES. More thorough disclosure policies could have prevented much of the damage from these schemes by stopping them before they began.

While a financial disclosure requirement can never fully eliminate bad behavior, it is undoubtedly a useful tool to enforce accountability.

When comparing Chicago’s disclosure requirements to five other major cities—New York, Los Angeles, Dallas, Phoenix and Charlotte—Chicago’s shortcomings become abundantly clear.

Below is a breakdown of how Chicago’s financial disclosure system compares with other cities:


Disclosure forms and reporting systems

While page length, number of questions, and topics covered can be cosmetic differences in how the disclosures compare with one another, they can be important barometers for the thoroughness and detail of disclosures. 

New York: The financial disclosure is completed online, but a copy is available to the public for review and identifies all of the questions asked by the online disclosure.

In total, there are five separate sections (1. filer profile, 2. positions, income and reimbursements, 3. holdings, 4. other activity, and 5. relatives in city service) and a total of 46 questions. Instructions and definitions related to each question are provided as necessary.

The complete form is 23 pages long.

Los Angeles: The form, referred to as California Form 700, is utilized by the entire state of California­ through California’s Fair Political Practice Commission.

It is divided into seven sections (1. cover page, 2. investments, 3. investments, income and assets of business entities/trusts, 4. interests in real property, 5. income loans and business positions, 6. gifts, and 7. gifts, travel payments, advancements and reimbursements).

It is seven pages long and consists of 21 questions. A 16-page reference pamphlet and a 10-page sheet with an FAQ are available to clarify questions concerning the financial disclosure.

Phoenix: The financial disclosure statement is 10 pages and 17 questions. The most recent financial disclosures of the city’s elected officials are available online for public access. A blank form is not available online. Council Member Thelda Williams’ disclosure statement has been linked as reference.

Dallas: The form is eight pages and 13 questions long. Chapter 12A of the Dallas City Code relating to City Ethics is provided online. Sections 12A-19 to 12A-23 specifically relate to the financial disclosure report.

Charlotte: A 31-page document accessible online elucidates disclosure requirements. The six-page and 14-question disclosure form itself is also included. The disclosure on its own can be viewed here.

Chicago: The form is two pages long and contains 16 questions. An additional two-page sheet is available, which includes instructions and definitions.

Summary:

Chicago’s form is the shortest in page length, and very little supplemental clarification is provided. This is detrimental to the public’s understanding of the form, and leaves questions up to the interpretation of the official.

This is not a form where concision is helpful. Brevity is problematic, because it has the potential to leave loopholes and gaps in information. Shorter disclosure forms do not allow for a comprehensive understanding of an official’s financial position.


Income and employment

All jurisdictions require some type of disclosure about income and employment of the official and immediate family members. Making the employment of relatives publicly available can help to reveal any potential family ties or conflicts of interest.

For example, 40th Ward Alderman Patrick O’Connor has voted multiple times on zoning changes for properties later sold by his wife, Barbara O’Connor, who is a real estate agent. Without her husband’s zoning decisions, she would have been unable to develop and sell many of the homes she has worked with. While this is all accomplished within the law, it raises a few eyebrows.

Complete income and employment disclosures of both elected officials and their family members can urge officials to think twice before allowing familial bias to guide decisions.

New York: Defines relative as a “spouse, domestic partner, child, stepchild, brother, sister, parent, stepparent, or grandparent of the person reporting.” The form requires, “Report any relatives you have who hold a position, whether paid or unpaid, with the City.”

Los Angeles: Inquires about any business position held or source of income over $500, and also includes, “Spouse’s or registered domestic partner’s income.”

Phoenix: Asks for “The name and address of each employer who paid you, your spouse, or any member of your household more than $1,000 in salary, wages, commissions, tips or other forms of compensation (other than gifts) during the period covered by this report.”

Dallas: Asks the official to “Please list the name(s) of your employer(s) and the names of all employers for your spouse or domestic partner, and your dependents.”

Charlotte: Asks the official to “List the name of each business with which you are associated where you or a member of your immediate family is an employee, director, officer, partner, proprietor, or member or manager and that you have reason to know: (1) is doing or seeking business of any kind with the City; or (2) has financial interests that may be substantially and materially affected, in a manner distinguishable from the public generally, by the performance or nonperformance of your official duties.”

Chicago: Asks the official, “Did your spouse or domestic partner receive compensation or payment in excess of $5,000 for professional, business, employment, work or other services rendered to a person or entity doing business with the City of Chicago, the Chicago Transit Authority, Chicago Board of Education, Chicago Park District, Chicago City Colleges, or Metropolitan Pier and Exposition Authority?”

Summary:

Chicago ranks worst in this category by limiting disclosures to spouses or domestic partners, employment with specific departments of the city, and payments of $5,000 or more.

Other jurisdictions have low or no thresholds for payment that are required for disclosure. They also include family members beyond spouse or domestic partner and request documentation for all employment, even if it is outside of the city.

Nepotism and patronage are some of the leading sources of corruption. Chicago should require that immediate family members’ employment be disclosed, even if it is outside of a government agency. This will boost transparency, ensure officials are working for the public, and avoid any conflicts of interest.


Gifts 

It is not uncommon for gifts and noteworthy benefits to be given to public officials. Chicago defines a gift as “anything of value given without fair-market consideration.”

These advantages however, can entice officials to establish special ties. Disclosing what gifts are received, and from whom, can shield officials from making ethically unsound decisions. The job of elected officials is to serve constituents, not to garner bonuses.

New York: Asks officials, “Did you receive any gift or gifts from the same person, entity or donor or affiliated donors who had business dealings with the City, other than a relative, in the total amount or with a total value of $50 or more […]?”

Los Angeles: Asks to provide the source of any gift, the business activity of the source (if applicable), the value, the date received, and a description of the gift.

Phoenix: Asks the official to “Disclose the name of the donor who gave you or a member of your household a single gift or an accumulation of gifts during the preceding calendar year with a cumulative value of over $500.” Phoenix asks the official to “Also, list anything of value that any other person, outside of your household, received for you or a member of your household’s use or benefit.”

Dallas: Asks the official to “Please list the source of each gift or accumulation of gifts from one source of more than $250 in estimated fair market value received by you or your spouse/domestic partner and dependents or received by a person for the use or benefit of you or your spouse/domestic partner and dependents, within the preceding calendar year and the estimated fair market value of each gift.”

Charlotte: Does not specifically ask to disclose gifts.

Chicago: Asks the official, “Did you receive from any person (other than relatives or a domestic partner) one or more gifts having an aggregate value in excess of $250?”

Summary:

Chicago is graded second to last, just behind Charlotte, in reporting gifts.

New York requires more gifts than Chicago to be disclosed by dropping the total amount mandated for disclosure from $250 (as required by Chicago) to $50 for gifts from the city. Both Dallas and Phoenix instruct gifts received by family members to be listed as well, even if they have no city affiliation. Los Angeles requires all gifts to be logged, regardless of monetary worth or who they are from.

Gifts reveal to the public any potential interests or bribes that may have a chance of occurring. The more that gifts are required to be accounted for in financial disclosures, the less likely it is for these crimes to be committed or continue unnoticed. 


Travel expenses 

Individuals and organizations often offer to cover an official’s travel expenses in order for him or her to attend an event or speak at a conference. It recently was revealed that for the sixth year in a row, Chicago Mayor Rahm Emanuel has accepted expensive travel gifts, such as rides in private jets. Officials should be working for the well-being of the public and not for special travel perks, and the public has a right to know when they are not doing so.

Examples of travel costs include plane tickets and hotel rooms.

New York: Asks officials, “Did any non-governmental entity or person pay for travel-related expenses in an amount of $1,000 or more in 2014 for activities related to your official duties with the City by either reimbursing you or paying the travel related expenses directly on your behalf?”

Los Angeles: Asks to disclose the following information regarding “gifts of travel”: name of source, address, date, amount of money, and travel destination.

Phoenix: Asks officials to “Disclose the name of each meeting, conference, or other event where you participated in your official capacity as a public officer if you incurred $1,000 or more in travel-related expenses, which were not paid by you.”

Dallas: Does not specifically ask to disclose travel expenses.

Charlotte: Does not specifically ask to disclose travel expenses.

Chicago: Does not specifically ask to disclose covered travel expenses.

Summary:

Chicago, Dallas and Charlotte all fail to require officials to report covered travel expenses separate from gifts.

Covered travel expenses may reveal a public official’s ties to a particular person or business. It is important for this information to be accessible to the public in case a public official has personal interests in mind. Knowing what these potential interests are is crucial to determine if an official is acting in an illicit manner.

To improve transparency, Chicago should demand travel expenses to be disclosed, along with details regarding their nature.


Debts and loans

Knowledge of debts and loans is necessary to be aware of an official’s monetary state. A person suffering financially may be more likely to accept a bribe or kickback. Debt is defined as money owed to an entity and a loan is money borrowed from an entity. Both are important components of an individual’s financial standing.

New York: Asks officials, “Was any loan, note, or account receivable owed to you in the amount of $1,000 or more by anyone other than a relative (i.e., did anyone owe you money)?”

Los Angeles: States, “Personal loans and loans received not in a lender’s regular course of business must be disclosed.”

Phoenix: Asks officials to “Disclose the name and address of each creditor to whom you, or a member of your household, owed a personal debt over $1,000 during the period covered by this Statement.” AND “Disclose the name and address of each debtor who owed you or a member of your household a debt over $1,000 at any time during the period covered by this Statement, and the approximate value of the debt.”

Dallas: Asks officials to “Please list the names of all persons or entities who owe you or a spouse/domestic partner and dependents an unsecured debt of more than $5,000.”

Charlotte: Does not specifically ask to disclose information regarding debts and/or loans.

Chicago: Asks officials, “If you owe or anyone owes you more than $5,000.00, did the debtor, creditor or guarantor of the debt do business with or do work for the City of Chicago […]?”

Summary:

Chicago is second to last in this topic. It is more precise than Charlotte, but less detailed than New York, Los Angeles, Dallas and Phoenix.

New York and Phoenix ask officials to disclose debts over $1,000 and instruct officials to give information regarding the debts of close relatives, such as spouses.

Debt and family interest have the ability to tempt officials to act in certain ways, and knowing of an official’s personal and family situation can help prevent or discover fraudulent behavior.


Real estate

Awareness of property owned by an official can bring attention to possible unethical behavior. For example, Alderman Roberto Maldonado (26th Ward) profited from renovating properties along the popular 606 trail in Chicago. Two years later, he supported a City Council measure to make it more expensive to flip properties along the trail. This measure would prevent other individuals from raking in revenue as Maldonado did.

Real estate is referred to as “any owned property” such as buildings and residences.

New York: Asks officials to “Report any real estate in which you had a vested or contingent interest valued at $1,000 or more […]. Include timeshares, real estate owned outside of New York or the United States, and all other real estate in which you have a vested interest, that is, which is owned by you, owned by you jointly with another person or entity, held in a trust under which you are the beneficiary, or owned by a partnership of which are you a partner or member.”

Los Angeles: Requests official to log any real property with a fair market value over $2,000 or any rental property sold. Official must include the address of the property and the nature of interest.

Phoenix: Asks official to disclose, “Real property and improvements in the City of Phoenix to which you or a member of your household hold, or held title during the period covered by this Statement. Describe the property’s location and approximate size. Using the value categories […] report the value of your equity. If that property was acquired or divested during the period covered by this Statement, list the date and what occurred.” AND to disclose “City of Phoenix real property and improvements the titles to which were held by a controlled or dependent business”

Dallas: Asks official to “Please list (by street address, and if no street address is ascertainable, by lot-and-block description) all real property located within the State of Texas in which you or your spouse or domestic partner and any dependents has a) a leasehold interest; b) a contractual right to purchase; or c) an interest as a fee simple owner, a beneficial owner, a partnership owner, a joint owner with an individual or a corporation, or an owner of more than 25 percent of a corporation that has title to the real property.”

Charlotte: Asks official, “Do you, your spouse, or members of your immediate family have an ownership interest in any real estate located in the City of Charlotte or the City’s extraterritorial planning jurisdiction with a market value of $10,000 or more? This may include your home/residence.”

Chicago: Asks official, “Do you currently have a financial interest in real estate located in the City of Chicago, other than your principal place of residence?”

Summary:

Chicago is the least thorough jurisdiction in this topic. It asks only about real estate interests concerning the official submitting the disclosure, not relatives. Charlotte, Phoenix and Dallas seek information concerning the real property of family members, as well as the filer. Dallas asks all real property within the state to be reported, and New York instructs property outside of the state and U.S. to be documented as well.

Again, family interest has the ability to influence an official’s political decisions. Chicago could be more detailed by including residences outside the city to be disclosed and including property owned by relatives.


In the past 45 years, 34 Chicago aldermen have been convicted for corruption, yet Chicago still has the worst financial disclosure requirements for elected officials. Chicago has continuously failed to ask hard-hitting questions of its public servants.

The financial disclosure form is one of the easiest ways to avert government officials from taking self-serving bribes, kickbacks and fraudulent deals­­.

To improve the disclosure form, Chicago should require officials to disclose more information regarding relatives of the official and any income, debts, loans and real estate of the official and relatives.

Chicago also needs to mandate that public officials report all gifts and covered travel expenses regardless of the monetary worth or amount. This will reveal any possible personal ties, and potential illicit business.

Improving the disclosure form and making the information available to the public is one of the easiest ways for the city to prove it is serious about derailing potential corruption.

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