Does being a Minnesota legislator mean never having to say you’re sorry?

Senate Media Services/David Oake
Legislators from both parties have told MinnPost that State Sen. John Hoffman's actions appear to be a conflict of interest, given his employment with Ally outside of the Legislature.

In the final hours of Minnesota’s 2016 legislative session, a small proposal was slipped into the state’s supplemental budget bill, which helps fund programs and projects around the state. Little noticed at the time, the measure set aside grant money for organizations that help people living with disabilities find good-paying jobs. 

The proposal was authored by DFL Sen. John Hoffman, who also happened to work for a nonprofit, Ally People Solutions, that did exactly that kind of work. What’s more, in the final hours of the session, the measure had been amended. Under the new language, only a handful of groups in the state would qualify for the money. Ally was one of them. 

Later that summer, the organization was among the first to apply for the funding Hoffman had helped to create as a legislator. 

Senate Majority Leader Paul Gazelka
MinnPost photo by Briana Bierschbach
Senate Majority Leader Paul Gazelka

Legislators from both parties have told MinnPost that Hoffman’s actions appear to be a conflict of interest, given his employment with Ally outside of the Legislature.

“Legislators are held to a high standard,” Republican Senate Majority Leader Paul Gazelka told MinnPost. “Sen. Hoffman’s actions appear to be below those standards.” 

Leaders in the Legislature didn’t know about the conflict until after it was reported by MinnPost, nor did the Department of Employment and Economic Development (DEED), which re-issued the grant application with conflict of interest language after our inquiries. But even after the department learned that Hoffman had authored the proposal, Ally was allowed to resubmit an application with a “conflict of interest mitigation plan.” In February, DEED awarded Ally a grant of $175,000. 

Along with being what would seem to be a textbook conflict-of-interest case, the episode also illustrates a longstanding issue at the Capitol: a systemic weakness in how the Minnesota Legislature polices its members — a process that rarely catches potential conflicts before they happen and seldom punishes lawmakers for engaging in unethical behavior. 

Relying on self-reporting

In Minnesota, being a legislator is technically a part-time job, so many lawmakers have other sources of income outside their work at the Capitol. As a result, legislators are sometimes asked to vote on policies that have the possibility of intersecting with their private lives. That’s where conflict-of-interest policies come into play. 

According to Minnesota law, a conflict of interest occurs when a “public official’s votes, actions, or decisions would affect the financial interests of the official, or those of an associated business, in a manner that is greater than the effect on other members of the same occupation or profession.”

Most ethics experts say that doesn’t mean a teacher, for example, couldn’t vote on the state’s education budget, since the vote would affect all teachers equally. A conflict only emerges when a lawmaker has the potential to benefit personally or financially based on his or her public position — in a way others in the same industry can’t.

To handle potential conflicts, once a year all legislators in Minnesota must submit an economic interest form that includes sources of compensation, businesses they are associated with or any contract work of more than $2,500. The form is made public on the Minnesota Campaign Finance and Public Disclosure Board’s  website. If a conflict emerges during the legislative session, lawmakers are required to prepare a written statement describing the potential conflict of interest to the presiding member of the House and Senate chamber. 

Hoffman did not discuss the legislation with Senate leadership during the 2016 legislative session, according to staff, and the conflict went unnoticed by officials or the broader public.

Hoffman did report his part-time employer as Ally People Solutions on the form posted by the Minnesota Campaign Finance and Public Disclosure Board. Even so, though the board has the authority to audit legislators’ statements, those reviews usually only happen if the board is tipped off. If a legislator is trying to hide something from the report or doesn’t volunteer information, identifying a conflict can be difficult. 

Disincentives and inconsistencies

Even after the issue was reported by MinnPost, no one brought it before the Senate’s Ethical Conduct Subcommittee, which reviews conduct in the Senate when necessary. The body consists of four members — two Democrats and two Republicans — and is responsible for investigating complaints of improper conduct by a member or employee of the Senate. Complaints about a member or an employee must be in writing and submitted to the subcommittee during a legislative session. The subcommittee then has 30 days to either make a finding of no probable cause, defer proceedings, or to launch an investigation. 

The problem with all that: In order for the subcommittee to do anything, another legislator has to bring the complaint — something many members feel uncomfortable doing. What’s more, the way the ethics system is set up now, ethics complaints often get labeled as partisan attacks from legislators of the opposing party, not as legitimate concerns. 

State Sen. John Marty
State Sen. John Marty

“It’s hard for people to enforce on their colleagues,” said Sen. John Marty, DFL-Roseville, who has pushed for decades for stronger ethics policies in St. Paul. “It’s a place where you have to have relationships with people it’s hard for legislators to enforce on each other. It’s kind of like you’re going to punish your family member or your colleague at work. If you want to accuse me of doing something wrong, it’s going to be really awkward to work together.” 

The numbers speak to just how awkward legislators find the practice. Over the last 30 years, there have been just 11 ethics hearings in the Minnesota House (two more cases were dismissed before they made it to a hearing). Legislators were reprimanded or forced to apologize in four of those cases. 

Ethics hearings in the Senate have been more numerous, if not exactly frequent; between 1994 and 2017 there were 21 hearings. In just five of those cases were senators forced to apologize or leave a specific committee post.

‘We’re all human’

The state’s lax system of ethics enforcement isn’t a new problem, even if it is at odds with Minnesota’s reputation for good government. In 2015, Minnesota received a D- on the Center for Public Integrity’s report card on government secrecy, conflicts of interest and ethics.

But improving it also remains unlikely, given the ethical Catch 22 the state now finds itself in: Lawmakers aren’t likely to make changes to the system unless there’s a major ethics scandal, but the way the system is set up makes it highly unlikely that will ever be an ethics scandal, given the difficulty in bringing unethical behavior to light.

Other states handle it differently. Nearly all states have some kind of ethics committee or commission to solidify their credibility with the public, and many have standing ethics committees in one or both of their legislative chambers, like Minnesota. But in 10 states, the Legislature also has the power to create ad hoc committees if there’s a suspected violation of an ethics law or rule — or if a complaint is filed by another member or the public. 

Marty suggests creating an ethics committee that keeps complaints anonymous, so legislators don’t have to feel that they are “undercutting” their colleagues. He also thinks the panel could be independent, possibly appointed by lawmakers or the courts, so that legislators aren’t in the position of having to reprimand other legislators. In states like Alaska, Nevada, New York and Washington, public members are part of legislative ethics commissions and committees. “It’s not ethical people versus unethical people; we’re all human, and we’ve set up a system where you’re going to have ethical problems,” Marty said.

Hoffman did not agree to be interviewed for this story. In its conflict-of-interest mitigation plan submitted to DEED, Ally said none of the state grant money will be used to pay Hoffman’s salary.

“Like many members of the Minnesota Legislature, I also have another job in addition to being able to represent my district. My work with Ally People Solutions is focused on marketing the organization as it seeks new companies and others to partner with,” he said in a  statement. “My work and role with Ally has been disclosed as part of the process the organization has participated into regarding the DEED program.”

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Comments (6)

  1. Submitted by tom kendrick on 03/16/2017 - 12:34 pm.

    How about a citizen?

    I see a clear conflict of interest. May I, as a citizen, bring a charge of conflict of interest? If our state received a D- on ethics inquiries, we need another means for forcing our legislators’ hands.

  2. Submitted by Pat Terry on 03/16/2017 - 04:18 pm.

    Bigger question

    Is he still blocking you on Twitter?

  3. Submitted by Bill Willy on 03/16/2017 - 06:03 pm.

    As big or bigger fish to fry?

    While John Hoffman’s actions aren’t unimportant, another similar and potentially much bigger conflict of interest is in the process of, or has just been, passed by the House and Senate: The health care reinsurance bill that will funnel $250 to $300 million per year of taxpayer money to the insurance industry to prop up that industry’s “individual market” miscalculations if the Governor doesn’t veto it.

    As it relates to the topic of this article, three of the House bill’s authors — the people who wrote the law — are insurance agency owners or “independent insurance agents”:

    Greg Davids, the bill’s chief author and owner of the Gregory M. Davids Insurance Agency in Preston, Minnesota — http://www.1410wizm.com/index.php/item/29424-minnesota-governor-floating-idea-of-opening-up-minnesotacare-for-anyone

    Glen Grunhagen of Gruenhagen Insurance and Financial Services in Glencoe —
    https://en.wikipedia.org/wiki/Glenn_Gruenhagen and

    Tony Jurgens, an Independent Insurance Agent — http://www.cfboard.state.mn.us/eis/rpdetail/rp602_12126.html

    And, while not an author of the Senate version of the bill, Senate Majority Leader Paul Gazelka is the owner of the Paul Gazelka Insurance Agency — http://www.cfboard.state.mn.us/eis/rpdetail/rp601_7055.html

    While talking about the bill at a “media opportunity event,” Gregory M. Davids said, “his bill should provide comfort to companies teetering between offering individual policies and pulling out of the market. ‘This thing called competition has been pretty good the last 200 years. Let’s get some competition, let’s get a robust market back.’ ”

    “In passing the bill Monday mostly along party lines, the Republican-led House also voted down DFL Gov. Mark Dayton’s plan to expand a public option. (www.mprnews.org/story/2017/01/24/what-is-public-option-health-insurance)”

    Even though a lot of Minnesotans think the Governor’s plan makes a lot of sense and would be a much better, simpler, more efficient and cost-effective way to deal with the problem — and even though Gregory M. Davids and Republicans are all in favor of “this thing called competition” — when asked why they voted down the Governor’s bill they said, it would “unnecessarily pit a government-sponsored plan against private policies.”

    http://www.mprnews.org/story/2017/03/13/minnesota-house-passes-gop-reinsurance-bill

    “Unnecessarily”? What does THAT mean?

    Unnecessarily create some of that thing called competition that people who own insurance agencies and make their non-legislative living selling insurance would rather not deal with?

    Does it mean they think it’s unnecessary for their clients to be exposed to a “public option” but that it IS necessary to pass a law that says taxpayers MUST provide hundreds of millions dollars per year to help some of their clients pay for insurance the law’s authors may sell them?

    Again: John Hoffman’s actions ought to be looked into and there should be consequences for his actions if it turns out he’s guilty of related “transgressions.”

    But if one of those transgressions is “the appearance of,” or actuality of, a $177,000 conflict of interest, there’s no doubt the same standard and set of investigative actions ought to be taken when it comes to legislators who sell insurance and own insurance agencies authoring a law that directly benefits their industry (and possibly themselves) to the tune of $250,000,000 to $300,000,000 million per year.

  4. Submitted by Joe Musich on 03/16/2017 - 09:10 pm.

    Was there not an issue with ….

    Speaker of the House Representative Kurt Daudt (R) District: 31A also ?

  5. Submitted by Dennis Wagner on 03/17/2017 - 09:04 am.

    Irony

    These are the guys making the laws and regulations to keep this kind of stuff from happening in the privates sector! Sorry guys, yes we did confront this stuff in industry, evidently you lack the cajones to practice what you preach! Its called ethical values, and it is a long slippery slope once you start compromising.

  6. Submitted by Howard Miller on 03/17/2017 - 02:52 pm.

    on our state’s D grade for ethics

    It is noteworthy that only 3 US states (Ak, Ct, CA) scored above the D range in the Center for Public Integrity’s investigation into state governing ethics – all in the C range. No one earned an A or B.

    https://www.publicintegrity.org/2015/11/09/18693/only-three-states-score-higher-d-state-integrity-investigation-11-flunk

    13 US states got a failing grade. It is no comfort to be in such thick company of thieves at the state government level. I believe it even worse in our national legislature, amplified by the amount of new corrupting cash bathing politicians in the post-SCOTUS Citizens United decision era. Sad and unacceptable.

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