A new report says a law requiring the online posting of senior federal executives’ financial information would likely impinge on employees’ privacy and wouldn’t do much to deter conflicts of interest.

The National Academy of Public Administration was tasked by Congress with studying the STOCK Act — short for “Stop Trading on Congressional Knowledge” — in response to concerns about privacy and identify theft.

In its report, NAPA recommended Congress indefinitely suspend the online reporting requirement for 28,000 Senior Executive Service members set to go into effect next month.

A ‘boiling the frog’ scenario?

The group found the threat of identify theft to be a plausible one. The report cited the rise of the Internet and the growth of other publicly available information about high-level federal employees. Adding a detailed public database on employees’ financial information could be exploited by a host of “malicious actors,” such as petty criminals, prisoners or even terrorists, the report stated.

“The panel believes that establishing the searchable databases the STOCK Act envisions may equate to a ‘boiling the frog’ scenario in that it adds to the extensive information already available about federal employees and could result in significant unintended consequences,” the report stated. “In other words, this forthcoming increment in available data could become the fatal temperature change that goes undetected by the hapless frog.”

The group acknowledged that it lacks empirical data about the actual harm posed by an online database of financial information.

However, the group, said testimony and interviews from agency officials, cybersecurity experts, ethics and human-resources officials, and national-security experts, all support the conclusion that online posting “does indeed impose unwarranted risk to national security and law enforcement, as well as threaten agency missions, individual safety and privacy.”

Public reporting less effective than current process

NAPA also said there’s little evidence the database would help better deter or detect conflicts of interest. In fact, the group stated a public database would likely be less effective than the agency-specific process in place now.

The current process for collecting and managing financial disclosure forms is decentralized — employees fill out financial disclosure forms and agency ethics offices comprehensively review them.

“Because the process is conducted inside the agencies by designated ethics officials, it allows reviewers to be able to connect a filer’s personal financial information with his or her specific duties and responsibilities within the agency, an essential element in the determination of conflict of interest,” the report stated.

A publicly viewable database would contain a federal official’s job title, but little specifics on their actual day-to-day duties. “The ability to detect a potential conflict by looking at the job title in an online record and matching that against potential conflict of interest … would be a difficult undertaking, one more likely to produce unproductive leads,” the report stated.

The group said it believes it is “extremely unlikely” that third-party review of the information by the public would lead to improvements in the process.

Requirements hurt recruitment and retention

The new reporting requirements could also make it harder for agencies to recruit and retain members of the Senior Executive Service, according to interviews with agency HR offices.

Agencies told NAPA some employees have asked to be downgraded or have left federal service to be exempt from the reporting requirement, citing the need to protect their privacy. Other agencies, particularly in the science and technology fields, said prospective hires have even turned down jobs because of the reporting requirements.

Some proponents of the new requirments have pointed out the fact that online databases of financial information are not new. In fact, members of the House and Senate (and their staffs) have been subject to public reporting requirements for at least the last few years. Their disclosure forms are available online and viewable by the public.

But NAPA said the purpose of legislative financial disclosures for legislative branch employees is fundamentally different than for Executive Branch employees. The public posting requirement for lawmakers is not necessarily to identify potential conflicts of interest but to ensure political accountability, NAPA said. And unlike for senior federal executives, public interest in lawmakers financial holdings is already high.

Provision on hold for now

NAPA said Congress should suspend the new reporting requirements and the creation of an online, searchable database.

Congress has delayed implementation of these requirements three times since first passing the STOCK Act in April 2012. Following a court filing by the Senior Executives Association and other employee groups, a district court injunction also put the provisions on hold.

Unless Congress acts, the expanded reporting requirements will go into effect on April 15 and the database will go live by October 2013.

Currently, members of the public are still able to access financial disclosure forms by going directly through agencies’ ethics offices and complying with certain protocols, such as promising not to use the information for illegal or commercial purposes. In addition, employees are notified if someone requested to view their financial information. “This system was seen as having provided adequate safeguards against misuse of employee financial information,” NAPA stated in its report. But an online searchable database would not provide similar safeguards, the group argued.

The Senior Executives Association praised the group’s findings.

“NAPA has reached the only possible conclusions regarding the consequences of the STOCK Act’s provision requiring posting financial reports on the Internet,” said SEA President Carol Bonosaro in a statement.

But Bonosaro said she was “baffled” that the report called only for suspending the requirement, instead of repealing it outright. “This leaves it to Congress to take the only action which makes sense, and the Association urges that it do so,” Bonosaro said.

The report also received a welcome reception from at least one lawmaker — Rep. Jim Moran (D-Va.), who has been a vocal critic of the new reporting requirements.

“As I continue working to push for a permanent fix to safeguard federal employees’ personal information, I hope the recommendation by the non-partisan NAPA, a well-respected and non-partisan organization, will be given serious consideration before members of Congress,” he said in a statement provided to Federal News Radio.

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