Ethics Commission Investigating Top Montgomery Official’s Connection to County Vendor

Ethics Commission Investigating Top Montgomery Official’s Connection to County Vendor

Chief administrative officer had contract with firm before county paid for budget simulation subscription

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Kleine redone

Chief Administrative Officer Andrew Kleine

File photo

The Montgomery County Ethics Commission is investigating a top Montgomery County government official’s contractual relationship with a public policy company before it did business with the county in the past year.

In the months before he became the county’s Chief Administrative Officer Andrew Kleine, who also runs a consulting business, had partnered with Balancing Act — a budget simulation program offered by the Denver-based public policy strategy firm Engaged Public.

The contract spelled out that Kleine would do consulting for Balancing Act and help promote it. He would receive a portion of the proceeds from licensing sales of the software.

Kleine’s connection to Balancing Act ended before he took his job with the county in December 2018, and no money was ever exchanged, a company representative said.

Two Montgomery County spokesmen have refused in recent weeks to answer about Kleine’s relationship with Balancing Act. However, Barry Hudson, a spokesman in the county executive’s office, confirmed Monday that the county’s ethics commission is reviewing the matter. He would not elaborate.

“The County Executive understands that the matter is under review by the Ethics Commission, which is an independent agency charged with the responsibility of interpreting the Ethics Law.  Until that review is completed the County Executive does not believe that it would be appropriate for Executive Staff to comment on this matter,” Hudson wrote in an email.

Bethesda Beat tried six times since early August to arrange an interview with Kleine. Two county spokesmen said in response to several of those messages that they would try to line up an interview with him. An interview was never arranged. Kleine also did not respond to a message left Monday afternoon.

The county purchased a one-year subscription to Balancing Act on Dec. 21, 2018, for $9,800, according to a receipt provided by Montgomery County’s public information office. A proposal attached to the receipt states that the goal of using the software is to “better inform and engage” county residents on the budget.

The purchase came shortly after the Council Council confirmed Kleine on Dec. 11 as part of the transition to a new administration under County Executive Marc Elrich.

Kleine began a business relationship as a “partner” with Balancing Act around April or May 2018, Balancing Act President Chris Adams said in an interview on Monday. That relationship started shortly after Kleine stepped down from his job in Baltimore as the city’s budget director.

Adams said the company, which provides services to about 60 local governments across the country, contacted Kleine over social media informally while he worked in Baltimore. The company was interested in a budget simulation model Kleine created for the city.

“We were in touch, not in a super close way, and then he told us he would be writing a book and doing some consulting,” Adams said.

Adams said Balancing Act worked out an arrangement with Kleine in which he would offer his consulting services to the company and he would mention Balancing Act on his website. In exchange, if a client of Balancing Act wanted to purchase budget simulation software, 10 to 20 percent of the licensing fee money would go toward Kleine.

Adams said none of this ever happened.

“It never came to fruition. There was never any exchange of money,” he said.

Adams said Kleine contacted him around the time he was taking the Montgomery County government job in December to alert Balancing Act that he could not continue the business relationship.

“Andrew contacted us and said, ‘Now that I’ve taken the Montgomery County job, it wouldn’t be appropriate to continue this,’” Adams said.

Adams said he did not know the exact date the contract with Kleine was terminated.

“It was effectively over when Andrew took public office. I don’t know if we officially ended it, but was effectively over,” he said.

Under the county’s ethics code, government employees are allowed to have outside employment if they receive approval from the ethics commission.

According to the ethics commission’s outside employment approval database, Kleine received approval in June to operate his business, Andrew Kleine Consulting LLC, on the condition that he not “engage in consulting activity” with organizations that “do business with,” “seek action from” or “seek to influence” Montgomery County.

The five-member ethics commission investigates possible violations into the county’s ethics code. According to the county website, possible consequences of ethics violations can range from fines to dismissal from county employment. In some cases, the state’s attorney’s office can prosecute ethics violations as a misdemeanor.

In February, the county introduced a budget simulation tool on its website powered by Balancing Act. Users participated in an exercise in which they attempted to close a hypothetical $105 million deficit through a series of budget cuts and tax hikes.

At one forum earlier this year led by Budget Director Rich Madaleno, more than 60 residents used the tool.

A few months later, the county launched another Balancing Act-powered simulation in which users got a detailed breakdown of where their income-tax and property-tax payments were going by typing in their annual income and value of their home.

The budget initiatives have been part of a push by Elrich and his administration to increase government transparency and accountability.

Kleine has described himself as a “good government geek” and wrote a book last year called “City on the Line.” In the book, he discusses outcome budgeting, which emphasizes “allocating dollars to outcomes instead of departments” and “requires that every dollar be justified based on the value it delivers,” he said in an interview last year.

Balancing Act and Kleine’s Twitter accounts have featured several tweets since Kleine took office promoting City on the Line, and in some cases, features a photo of the book or of Kleine. In one tweet, dated May 22, Balancing Act tweeted a photo of Kleine at a conference for professional local government financial officers.

On his consulting business website, Kleine describes Balancing Act as a “partner” and states that together, they can “help clients engage their communities in fun and meaningful ways.” A link to Balancing Act’s website is also provided in the text. In early August, Balancing Act was listed under “partners” on the website, but had disappeared from the section later that month.

Balancing Act screenshot
A screenshot from Andrew Kleine’s consulting website in early August lists Balancing Act as a partner

When asked about Kleine’s website, Adams said he suspected it had not been updated since they ended their business relationship.

“There’s no formal partnership, there’s no legal partnership and no financial partnership,” Adams said.

Adams said although his company no longer has a contract with Kleine, they have remained “professional friends” and often see each other at trade shows.

Dan Schere can be reached at Daniel.schere@bethesdamagazine.com

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