University of Southern California



PPD 688-Business and Public Policy

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Frank V. Zerunyan J.D.

Professor of the Practice of Governance

Frank.Zerunyan@usc.edu

Class: Thursdays, 9 a.m.-12:20 p.m.,

Office Hours: By appointments

Office: RGL 200

E-Mail: Frank.Zerunyan@usc.edu

COURSE OVERVIEW-Spring 2016

The corporate entity is the driving engine of our economy. The rule of law established and managed by government is the anchor of our society. Yet public officials and corporate managers or leaders often lack a clear understanding of each other’s role in society and the interaction of those roles. In the private sector, the corporate challenges of the late 20th century brought about additional formal and informal influences and control by governmental bodies. Public policies continue to have profound effects on corporate structure and performance. In the public sector, aging infrastructure and governmental fiscal challenges heightened the dependency of the public sector on the private sector. Never before have the two sectors been so closely intertwined and dependent on one another.

This course explores the private sector and the public sector and the cutting edge phenomenon of this interdependency between the public and the private sectors by focusing on a broad range of governmental policies, laws and regulations. The emphasis will be on the impacts of public policy on the private sector and the role and impact of the private sector on public policy.

We will examine business and public policy through several perspectives that raise important contemporary issues. First, we will consider corporate responsibility and governance in the 21st century through the lens of the United States Congress and more specifically through various pieces of legislation: the Sarbanes-Oxley Act of 2002 and Dodd-Frank Wall Street Reform Act of 2010. We will discuss workforce development and economic growth for the region. We will study rule making and regulation, focusing on applications in the context of the health care industry and also through the lens of consumer protection in the State of California. Together we will discuss a cutting edge infrastructure delivery models through Public Private Partnerships including finance methodologies as in tax increments and infrastructure finance districts. We will conclude the course by discussing the role that business can play in social innovation both in private and public sectors. Each module will involve a combination of foundational readings and case applications, and we will also be hearing from invited prominent and relevant guest practitioners and/or visit them at their policy-making organizations.

This course will expand your practice tools and network. I will take you on select field trips to view policy chambers and policy being made at Southern California Association of Governments (SCAG), Southern California Air Quality Management District, Metropolitan Transit Authority (Metro). I will discuss these select opportunities more in detail during course introduction but dates and times may be subject to change.

In this class I expect you to present and participate to live discussions. We will make this course as interactive as possible. I have great respect for each and every one of you and look forward to learning with you. You all have a lot to contribute and I expect that you will. Pleased read your reading assignments before class, as your preparation for class is extremely important for our collective learning and success in this class.

The course is structured as five modules:

Module I. Overview of Business Structures-Government Relationship introduces the course and provides an overview of the business “firm” or “company” and its interaction with public sector. Collaborative governance.

Module II. Corporate Governance and Ethics considers the structure and relationships that determine corporate goals, performance, and ethical outcomes. Studies public policy that affects business.

Module III. Public-Private Partnerships considers how public and for-profit entities can partner around particular social or economic goals. It focuses in particular on “P3s”, public-private partnerships for the purposes of infrastructure development. We will review financial methods or laws to promote infrastructure finance and construction as in tax increment financing and finance districts.

Module IV. Regulation addresses the regulation of firms and industries -- both the economic regulation of prices, profits, entry and exit in specific industries, and the social regulation of business (e.g., environmental regulation). There is a particular focus on California, and consumer protection and the health industries.

Module V. Social Enterprise considers the role of business in affecting social change through pursuit of “double bottom line” strategies that consider both profits and social impacts.

These issues, while introduced in general terms, will be explored in detail within the context of applications and cases that are cutting edge within the United States and California, and in particular, corporate governance reform, the health industry, consumer protection, and infrastructure developments. Students will have an opportunity to pursue topics of interest to them through their term projects, which will consider how to improve a policy area through one of the strategies above (i.e. governance reform, regulatory reform, development of public-private partnerships, or social innovation strategies).

The primary class format will be seminar discussion focusing on the readings and analysis of applications, and case studies with occasional guest speakers or visits to policy organizations interacting with business.

Learning Objectives:

1. Increase your skills in evaluation of issues in business and public policy.

2. Increase your proficiency on regulation making and analysis

3. Improve your understanding of policy making or regulatory organizations

4. Increase your knowledge on ethics and conflicts in business

5. Improve your analytical and presentation skills to impact your written and verbal work.

6. Increase your capacity to work through ambiguity, complex problem solving, and effective inquiry.

7. Improve your professional and clear writing skills

COURSE READINGS

REQUIRED TEXTS:

The Company: A Short History of a Revolutionary Idea (Modern Library Chronicles) (Paperback), Modern Library (January 11, 2005) John Micklethwait (Author), Adrian Wooldridge (Author)

Understanding Regulation: Theory, Strategy, and Practice (Paperback)

by Robert Baldwin (Author), Martin Cave (Author) Oxford University Press; 1 edition (May 1999)

Social Entrepreneurship: The Art of Mission-Based Venture Development (Hardcover) by Peter C. Brinckerhoff (Author), Wiley 2000.

ADDITIONAL REQUIRED READING: See schedule below. Readings are listed per class session.

CASE MATERIALS: TBA and to be posted on Blackboard

COURSE REQUIREMENTS:

Class Discussion (15% of course grade) The course requires active, informed participation in class discussions Discussion will focus on the following:

Current Issues. Each of you will bring to class a short current article from any newspaper or magazine about a business or a challenge for a business that relates to policy or may require policy intervention. Each class we will dedicate 15 to 30 minutes for discussion on these current cases. Be prepared to introduce your article and place it in the context of issues being discussed in the course.

Case Discussions or Presentation of Readings. Throughout the semester we will discuss a variety of cases that apply to the particular arena of business and public policy. Your team (see below) will be assigned from our reading materials subjects to present in class to improve your presentation skills on a regular basis. Your participation is necessary and will be part of your overall grade as listed above.

Since class discussion is such an important component of this course, some guidelines may be useful. First, I am much more interested in the quality, rather than the frequency of your participation. Your goal in participation should be to clearly and concisely convince your fellow students and me of the wisdom of your perspective. Ask yourself the following questions:

o Are your points relevant to the discussion? Do they reflect evidence of analysis of the case and/or the readings?

o Are your comments linked to others -- i.e., have you been listening and integrating the comments of others into your own thoughts?

o Are you careful to distinguish different sources of information (e.g., facts, opinions, ideology)?

o Are you attempting to move beyond the readings and offer new ideas?

Journal and Final Reflection (15% of Course Grade) Each student will be required to keep a journal for each week. Each journal entry needs to be between 100-150 words. The entry will need to describe your “take away” or lesson learned each week. At the end of the 15 weeks, I will ask you to write an introduction (no more than 250 words) and conclusion (no more than 250 words), which collectively will be your final product for the class in form of a reflection paper. You may use up to 250 words to review each book in your reflection paper.

First Memo Team Project (25% of Course Grade) I will put you in teams of 2 or 3. The team will select a PPP project (worldwide) and produce a memorandum directed to an individual or authority that I will identify for you. The memorandum will articulate the reasons for the use of a PPP delivery methodology as opposed to any other delivery methodology. The memorandum shall be not more that 12 pages double space. The memo should be based on research regarding the specific project chosen by the team. Once you tell me your project I will provide you context and ask you to direct your memorandum accordingly. Students will then be required to present their proposal to the class and respond to questions.

Second Memo Team Project (25% of Course Grade) You will write a short regulation and defend it in a short memo no more than 5 pages double space and also defend your work in class with a presentation to the class.

Individual Memo on Social Responsibility (20% of Course Grade) You will pick an organization (USA or worldwide) and explore their social responsibility and provide an analysis for their reasons to be socially responsible. Are they profitable? Is this Social responsibility helping them with their bottom line? How and why? This paper (memorandum style is OK) should not be more than 12 pages double space.

Policy on Late and Missing Assignments: Please inform me in advance if you must miss a deadline for a reason. I cannot give a passing grade unless all assignments are completed. Please no unexcused absences. We depend on all of you for our collective learning experience.

Syllabus Revision. I will regularly assess progress and elicit student feedback regarding the course. If necessary I will revise the syllabus to make it more suitable.

Submission Protocol: All submissions must be emailed to me Frank.Zerunyan@usc.edu Please attach your PDF document, which should be saved in the following format Yourlastname_title.brf.

Academic Integrity: Students should maintain strict adherence to standards of academic integrity, as described in SCampus (). In particular, the University recommends strict sanctions for plagiarism, defined below:

Statement on Academic Conduct and Support Systems

 

Academic Conduct

Plagiarism – presenting someone else’s ideas as your own, either verbatim or recast in your own words – is a serious academic offense with serious consequences. Please familiarize yourself with the discussion of plagiarism in SCampus in Section 11, Behavior Violating University Standards sanctions. Other forms of academic dishonesty are equally unacceptable. See additional information in SCampus and university policies on scientific misconduct, . The university does not tolerate discrimination, sexual assault, and harassment. You are encouraged to report any incidents to the Office of Equity and Diversity or to the Department of Public Safety . This is important for the safety of the whole USC
community. Another member of the university community – such as a friend, classmate, advisor, or faculty member – can help initiate the report, or can initiate the report on behalf of another person. The Center for Women and Men and provides 24/7 confidential support, and the sexual assault resource center webpage describes reporting options and other resources.

Support Systems

A number of USC’s schools provide support for students who need help with scholarly
writing. Check with your advisor or program staff to find out more. Students whose primary language is not English should check with the American Language Institute , which sponsors courses and workshops specifically for international graduate students. The Office of Disability Services and Programs certification for students with disabilities and helps arrange the relevant accommodations. If an
officially declared emergency makes travel to campus infeasible, USC Emergency Information provide safety and other updates, including ways in which instruction will be continued by means of blackboard, teleconferencing, and other technology.

CLASS SCHEDULE

MODULE I: Overview of the Business-Government Relationship

January 14 INTRODUCTION OF COURSE

HISTORY OF THE FIRM (Company)

Course Introduction, Business and Public Policy

Readings: The Company, Ch. 1-4

THE MODERN CORPORATION AND PUBLIC POLICY

Readings: The Company, Ch. 5-8.

THE CORPORATION AND ITS STAKEHOLDERS

Readings:

Diane K. Denis, “Twenty-five Years of Corporate Governance Research….and Counting” Review of Financial Economics (Volume 10, Number 2, 2001) pages 191-212.

Brown, Lawrence D. and Caylor, Marcus L., "Corporate Governance and Firm Performance" (December 7, 2004).

Donaldson and Lee E. Preston “The Stakeholder Theory of the Corporation: Concepts, Evidence, and Implications” Academy of Management Review (January 1995) Vol. 20, No. 1, 65-91.

H. Jeff Smith “The Shareholders vs. Stakeholders Debate” MIT Sloan Management Review (Summer 2003) 85-90.

Steve Letza, Xiuping Sun, and James Kirkbride “Shareholding Versus Stakeholding: A Critical Review of Corporate Governance” Corporate Governance (July 2004) Vol. 12, Number 3, 242-262.

January 21 COLLABORATIVE GOVERNANCE – Government Interaction with Business

Readings:

Frank V. Zerunyan and Peter Pirnejad (4/2014). “From Contract Cities to Mass Collaborative Governance.” American City and County

Don Tapscott, Anthony D. Williams and Dan Herman (2008) “Government 2.0: Transforming Government and Governance for the Twenty-First Century.” New Paradigm

Ansell, Chris and Alison Gash. 2008. Collaborative Governance in Theory and Practice, Journal of Public Administration Research and Theory 18(4), 543-571.

Jung, Yong-Duck, Daniel Mazmanian, and Shui-Yan Tang. 2009. Collaborative Governance in the United States and Korea: Cases in Negotiated Policymaking and Service Delivery.

IN CLASS CASE STUDY: The Eight Neighbors: A case Study in Collaboration (I will post in on Blackboard)

MODULE II: Corporate Governance and Social Responsibility

TOPICAL OVERVIEW: Corporate governance is often viewed as both the structure and the relationships, which determine corporate goals and performance. The board of directors is typically central to corporate governance. Its relationship to the other primary stakeholders, typically shareholders and management team members, is critical. Additional and crucial stakeholders also include employees, customers, suppliers, and creditors. The corporate governance framework also depends on the legal, regulatory, institutional and ethical environment.

The 20th century defined the corporate entity and took it to the extreme of human ingenuity which in some instances created severe tensions among the stakeholders and in cases of public companies created a culture of irresponsibility and apathy towards the most important stakeholders; the shareholders. The Enron, Global Crossings and similar experiences culminated in government intervention and in the development and passage of Sarbanes-Oxley Corporate responsibility Act of 2002 15 USC 7201

January 28 WHY CORPORATE GOVERNANCE MATTERS: ENRON

POLICY INTERVENTION: SARBANES/OXLEY

DISCUSSION: Financial Crisis Case Study: DODD FRANK Wall Street Reform Act 2010 (Posted on Blackboard)

Readings:

Sarbanes-Oxley Act of 2002. Public Law 107-204- July 30, 2002

Dodd–Frank Wall Street Reform Act of 2010

February 4 WE WILL BE AT THE SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS

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COMMUNITY ECONOMIC & HUMAN DEVELOPMENT POLICY COMMITTEE

We will all take the Metro or Dash to Downtown LA to SCAG offices Located at

818 West 7th Street, 12th Floor, Los Angeles

I WILL DISCUSS THESE POLICY BODY VISITS DURING THE INTRODUCTION TO THE COURSE INCLUDING LOGISTICS

MODULE III. Public-Private Partnerships

TOPICAL OVERVIEW: "Public-private partnerships" (PPP) refer to contractual agreements formed between a public agency and private sector entity that allow for greater private sector participation in the delivery of public projects. Traditionally, private sector participation has been limited to separate planning, design or construction contracts on a fee for service basis – based on the public agency’s specifications. Expanding the private sector role allows the public agencies to tap private sector technical, management and financial resources in new ways to achieve certain public agency objectives such as greater cost and schedule certainty, supplementing in-house staff, innovative technology applications, specialized expertise or access to private capital.

Given the significant budget gaps confronting California and several states in the union, policy makers recognize the compelling need to establish infrastructure policies and funding solutions in order to address the growing need for meaningful infrastructure reform. Europe and Australia have been leading the way in making infrastructure a national priority and in discovering alternative finance and procurement mechanisms. For example, the construction and operation of toll roads has been turned over to private companies since the mid 1970’s. More recently airports as well as social infrastructure such as schools, courts and hospitals are being operated by the private sector. Known variously as public private partnerships or P3’s, these forms of legal structures help deliver what typically and traditionally has been a government procurement function for the construction and operation of public and social infrastructure. Leveraging the private sector to socially benefit the public sector is a fairly new phenomenon in the United States of America.

February 11 INTRODUCTION TO PPP’s AND OTHER METHODOLGIES OF COLLABORATION

Readings:

Public Private Partnerships
An Informational Summary prepared for The IEI Business Committee on Infrastructure, Richard G. Little, AICP

The Use of Public Private Partnership for Special Districts and All Levels of Governments, Frank V. Zerunyan, J.D. and Steven R. Meyers, J.D.

ULI PUBLIC DEVELOPMENT AND INFRASTRUCTURE COUNCIL

Time for a New Model for Financing Public Development and Infrastructure:

The Role of Public Private Partnerships

A Road Map to Success
for Public-Private Partnerships
of Public Infrastructure Initiatives, Sotiris A. Pagdadis, ET AL.

Funding and Financing Urban Infrastructure: Comparing Approaches in Brazil and the United States, Richard G. Little, AICP

DISCUSSION: (Your Individual Selections from Current Events)

A LOOK TO PPP LEGISLATION (I will assign each team a State or Country)

February 18 THE CASE FOR ECONOMIC DEVELOPMENT

DISCUSSION: Minimum WAGE Debate in class: good or bad for Economic Development?

Readings:







February 25 PPP CLASS PRESENTATIONS (Team Project for Grade)

TEAM PRESENTATIONS ALL CLASS PERIOD

March 3 WE WILL BE AT THE SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS

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TRANSPORTATION POLICY COMMITTEE

We will all take the Metro or Dash to Downtown LA to SCAG offices Located at

818 West 7th Street, 12th Floor, Los Angeles

MODULE IV; Regulation

TOPICAL OVERVIEW: It has been said that the law is like a skeleton—it provides a framework. The regulations are like the muscle and skin—they flesh out the law.

California’s rulemaking process is quite instructive and exemplary in the nation. Every department, division, office, officer, bureau, board or commission in the executive branch of California state government must follow the rulemaking procedures in the Administrative Procedure Act (Government Code § 11340 et seq.). Rulemaking must also comply with regulations adopted by the Office of Administrative Law (OAL) (California Code of Regulations, Title 1, §§ 1-120; unless expressly exempted by statute from some or all of these requirements.

Administrative Procedure Act (APA) requirements are designed to provide the public with a meaningful opportunity to participate in the adoption of regulations by California state agencies and to ensure the creation of an adequate record for the public and for OAL and judicial review. Every California state agency must satisfy the basic minimum procedural requirements established by the APA for the adoption, amendment or repeal of an administrative regulation unless the agency is expressly exempted by statute.

Modeling our experience on The Medical Practice Act and the Regulations promulgated by the Medical Board of California, we will study the concepts of regulation and the regulation process or the rulemaking process in the state of California. The interesting dynamics of regulation for public protection under the Medical Practice Act is one example of many regulations affecting an entire industry or the private sector. We will finish the topic by looking to draft a piece of regulation.

March 10 INTRODUCTION to REGULATION: WHY REGULATE?

Readings:

Understanding Regulation: Theory, Strategy, and Practice (Paperback)

by Robert Baldwin (Author), Martin Cave (Author)

Regulation and Compliance Motivations: Examining Different Approaches, Peter J. May

1. What is Regulation?

2. Why is there regulation?

3. What is a regulatory agency?

DISCUSSION PERIOD (Your Individual Selections from Current Events)

Guest Speaker?

SPRING BREAK NO CLASS ON MARCH 17, 2016

MARCH 24 RULE MAKING PROCESS AND RULE WRITING (LET’S BE CLEAR!)

Readings/Reference Materials:







How to Participate in the Rule Making Process (Department of Consumer Affairs Manual to be provided by Instructor)

1. What is Rulemaking?

3. How to participate in rulemaking?

4. How to initiate rulemaking? The function of the California Administrative Procedure Act

5. Rule making calendar and chart

DISCUSSION: (Your Individual Selections from Current Events)

March 31 WE WILL BE AT THE SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS

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ENERGY & ENVIRONMENT POLICY COMMITTEE

We will all take the Metro or Dash to Downtown LA to SCAG offices Located at

818 West 7th Street, 12th Floor, Los Angeles

April 7 HUMAN CAPITAL, ETHICS in POLICY MAKING

PUBLIC TRUST AND RULES (AB 1234)

Reading:

VALUE DRIVEN LEADING: A MANAGEMENT APPROACH J. Patrick Dobel, Professor at the Evans School of Public Affairs at the University of Washington. (Article on Blackboard)

Case Study: Bring an ethical dilemma that you encountered at work, at school or at home. Write one paragraph about the facts of the case. You do not have to name names or attribute the facts to anyone. The work can be anonymous.

April 14 CONFLICTS OF INTEREST

Readings:







Class Discussion Conflicts Cases TBA

MODULE V. Introduction to Social Enterprise

TOPICAL OVERVIEW: Increasingly private investors are affecting social change through development of business ventures that are mission driven, and that focus on core values as well as profit goals, a strategy known as the “double bottom line.” This is variously called “social enterprise;” “social innovation,” or “social entrepreneurship.” In this module we will consider the strategies and issues for developing business ventures that align social and financial goals, as well as some of the issues around social impact assessment and the “double bottom line.” We will also focus on some exemplars of socially oriented enterprise, (to be arranged).

April 21 DESIGNING PRODUCTS FOR SOCIAL CHANGE-FACILITATIVE LEADERSHIP

Readings:

Brinckerhoff, Ch. 1-5

I will ask you to BRING EXAMPLES OF DOUBLE OR TRIPLE BOTTOM LINE PROJECTS TO CLASS

DISCUSSION: (Your Individual Selections from Current Events)

Guest Speaker?

APRIL 28 WE WILL BE AT THE METRO BOARD MEETING [pic]

(SCHEDULE PERMITTING)

May 5 WE MAY BE AT THE SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS

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GENERAL ASSEMBLY (I will discuss this opportunity with you)

INSTRUCTOR PROFILE

Frank V. Zerunyan, J.D.

Professor of the Practice of Governance

Director of Executive Education

USC Sol Price School of Public Policy

Office Phone: (213) 740-0036

Mobile Phone: (310) 971-5219

E-mail: frank.zerunyan@usc.edu

Frank Vram Zerunyan, J.D. is a Professor of the Practice of Governance at the Sol Price School of Public Policy and Director of Executive Education at USC Price Bedrosian Center on Governance. His key areas of expertise include Local Governments, Public Private Partnerships, Civic Leadership, Land Use, Regulation, Negotiation and Executive Education. He teaches graduate courses on Intersectoral Leadership, Business and Public Policy, International Issues in Public Policy, Negotiation as well as International Laboratory. Frank also lectures locally and globally to build capacity and foster leadership among public executives worldwide. He has more than 30 years of comprehensive and multi-sectorial experience as a lawyer, author, consultant, director, board member, professor and public servant.

Frank is a two-term Mayor and still serving Councilmember in the City of Rolling Hills Estates, California. He previously served and continues to serve on various regional public boards, including law enforcement, sanitation, technology and transit. Frank’s public service on various local government policy committees extends statewide with the California League of Cities, California Contract Cities Association and Southern California Association of Governments. In 2008, Frank was elected and assumed a leadership role as the 52nd President of California Contracts Cities Association, the second largest municipal organization in the state of California.

As a gubernatorial appointee under Governor Schwarzenegger, Frank was a state regulator serving on the Medical Board of California in the Department of Consumer Affairs. His responsibilities on the Medical Board included the promulgation of regulation, professional discipline and the sixty million plus budget of the Medical Board.

In January of 2013, Frank was appointed to an ad hoc experts committee on capacity building in public administration at the United Nations Division for Public Administration and Development Management in the Department of Economic and Social Affairs. In that capacity, he lectures and conducts capacity building seminars at UN headquarters in New York as well as at UN Forums around the world. Also, as part of his global academic service focused on governance, Frank was recently appointed to the Editorial Council of the Public Administration Scientific Journal for the Republic Armenia.

Frank earned his Doctor of Law (J.D.) degree from Western State University College of Law and his Bachelor of Arts degree from California State University, Long Beach. He also completed his advanced legal studies in Corporate Taxation at the University of Southern California Law Center. He is a graduate of California League of Cities’ Leadership Institute.

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