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The Public Trustee Ethics Crisis: Where Do We Go From Here?

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The Denver Post's David Migoya deserves praise for his investigative reporting on ethics problems involving Colorado's public trustees. Last year, he broke the story that a law firm and software vendor involved in foreclosure work, which is administered by the public trustees, financially supported the public trustees' non-profit association and some trustees' campaigns for office. This year, he revealed questionable transactions involving some of the 10 public trustees appointed by the governor, including an office lease in a building owned by Pueblo County Trustee Nick Gradisar and a sham bidding process for a public notice contract signed by Mesa County Trustee Paul Brown.

Governor Hickenlooper deserves credit for acting swiftly to get control over the 10 gubernatorial appointees. He's required them to reapply for their jobs if they wish to remain in office, file conflict of interest statements, and obtain approval of all purchases or contracts above $5,000.

But what about the other counties? There is no reason to believe that the 10 gubernatorial appointees are the only ones with ethics issues.

In fact, Ethics Watch filed a complaint last year against the Public Trustees Association of Colorado for violating the Amendment 41 gift ban by using corporate dollars to pay for Black Hawk hotel rooms for 32 public trustees, resulting in the largest fine imposed to date by the Independent Ethics Commission.

Almost all of the trustees who accepted the free hotel room were elected county treasurers, who serve as the public trustee in 52 of Colorado's counties.

Part of the problem is that Colorado has four different systems for appointing public trustees. In addition to the 10 appointed by the governor and the 52 who are also the elected county treasurers, in Denver the elected clerk and recorder is the public trustee, and in the City and County of Broomfield, the public trustee is the city's revenue manager, an employee of Broomfield's finance department. With each of these systems comes different oversight. In Denver and Broomfield, the public trustee's office operates in the same manner as other city and county agencies.

The 10 gubernatorial appointees will now operate under close supervision from the governor's office. As for the other 52 counties, a new law requires trustees to submit budgets for review (but not approval) by county commissioners, but does little else to improve oversight of those trustees.

It's safe to say that, were Colorado to invent a public trustee system for the first time today, we would not choose this patchwork system.

Searching for a better alternative, Peggy Foley, who was the Public Trustee for Pueblo County under Republican Governor Bill Owens, pointed out that there is not much policy work being done in public trustees' offices. Mostly the office processes foreclosure paperwork, the idea being that having a public trustee involved in the process is superior to handling all foreclosures through the courts as in some states, or letting banks handle foreclosure paperwork themselves through a "private trustee" system in other states. The actual work of the public trustees' offices is handled mostly by staff whose work has not come into question in any of the recent scandals.

The real problem is that in most counties the public trustee position is either a political appointment or an elected official, not necessarily a professional administrator. Put that together with the lack of oversight and the access public trustees have to a fund consisting of fees paid by property owners who pay off their mortgages or collected from proceeds of a foreclosure sale. Though not tax money, these fees are public funds and need to be treated as such.

Ms. Foley recommends that public trustees be full time employees hired by a county based on qualifications rather than appointed or elected. Under this proposal, trustees could be part of the finance office, as is already done in Broomfield, or under the county treasurer. A third possibility is that the county clerk and recorder could hire the trustee, since the work is closely related to maintaining real property records that is already a clerk and recorder responsibility. Other options, such as extending the requirements the governor has imposed on his appointed trustees to the county treasurers, should be considered.

These different options deserve careful study by our legislators. When the new legislature convenes in January, let's hope they can work with the governor to come up with a solution that will bring the public trustee system into the 21st century.