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Home My WebLink About07-563 ConfidentialADVICE OF COUNSEL August 2, 2007 In your advisory request letter, you state: Given the passage of time and the current economic conditions, the Board would like to consider an increase in its compensation. The Board does not, however, want to run afoul of the state ethics laws in doing so. 07 -563 This responds to your letters of June 20, 2007, and June 25, 2007, by which you requested confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibitions or restrictions upon the members of a municipal authority board, who also serve as officers of the municipal authority, with regard to establishing a compensation program for officers of the municipal authority. Facts: As Solicitor for the A Authority, hereinafter referred to as the Authority," you have been authorized by all [number] Members of the Authority Board to seek advice on their behalf as to the following. Each Board Member receives a salary in the amount of [amount] per meeting. This amount was set by the governing body of the municipality, Council B, in the [date]. Each Board Member serves as an Officer of the Authority. The Authority offices consist of the following: [offices], which offices are hereinafter collectively referred to as the "Authority Offices." The Authority Offices have been in existence since at least [date]. Advisory request letter of June 20, 2007, at 2. You ask whether the Ethics Act would present any prohibitions or restrictions upon the Authority Board Members, who, as noted above, all serve as Officers of the Authority, with regard to establishing what you describe as "a reasonable compensation program" for service in the Authority Offices. Confidential Advice, 07 -563 August 2, 2007 Page 2 Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. The Authority Board Members are public officials as that term is defined in the Ethics Act, and hence they are subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), (j). The following terms are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include Confidential Advice, 07 -563 August 2, 2007 Page 3 an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. 65 Pa. C. S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official /public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to your inquiry, it is noted that the State Ethics Commission does not have the express statutory jurisdiction to interpret laws other than the Ethics Act. However, it is necessary at times to review other sources of law in order to properly apply the Ethics Act. The Commission has determined that if a particular statutory enactment prohibits a public official /public employee from receiving a particular pecuniary benefit or financial gain, then the public official's /public employee's receipt of same, through the authority of the public position, is unauthorized in law and hence, contrary to Section 1103(a) of the Ethics Act. Confidential Opinion, 03 -003. In the instant matter, it is noted that Article III, Section 27 of the Pennsylvania Constitution provides: Changes in Term of Office or Salary Prohibited Section 27. No law shall extend the term of any public officer, or increase or diminish his salary or emoluments, after his election or appointment. Constitution of Pennsylvania, Article III, Section 27. The Supreme Court of Pennsylvania has held that the above Constitutional prohibition applies to laws of the General Assembly and not to ordinances of municipal bodies. See, Baldwin v. Philadelphia, 99 Pa. 164 (1881); McKinley v. Luzerne Confidential Advice, 07 -563 August 2, 2007 Page 4 Township School District, 383 Pa. 289, 118 A.2d 137 (1955). Therefore, you are advised that the above prohibition does not impact your inquiry under the Ethics Act. The Municipality Authorities Act provides, in pertinent part, as follows: § 5610. Governing body (d) SUCCESSOR. -- Members shall hold office until their successors have been appointed and may succeed themselves and, except members of the boards of authorities organized or created by a school district, shall receive such salaries as may be determined by the governing body of the municipality, but no salaries shall be increased or diminished by a governing body during the term for which the member shall have been appointed.... (e) QUORUM. - -A majority of the members shall constitute a quorum of the board for the purpose of organizing and conducting the business of the authority and for all other purposes.... The board shall have full authority to manage the properties and business of the authority and to prescribe, amend and repeal bylaws, rules and regulations governing the manner in which the business of the authority may be conducted and the powers granted to it may be exercised and embodied. The board shall fix and determine the number of officers, agents and employees of the authority and their respective powers, duties and compensation and may appoint to such office or offices any member of the board with such powers, duties and compensation as the board may deem proper.... 53 Pa.C.S. §§ 5610(d), (e) (Emphasis added). On its face, there is statutory authority within Section 5610(e) of the Municipality Authorities Act for members of an authority board to set compensation for officers of the authority. However, you are advised that officer compensation must be for legitimate service as an officer; it may not be used as a means to circumvent the requirement of Section 5610(d) that board member salaries be set by the governing body of the municipality. See, Rebottini v. State Ethics Commission, 634 A.2d 743 (Pa. Cmwlth. 1993). Therefore, you are advised that Section 1103(a) of the Ethics Act would not prohibit the Authority Board Members from establishing a compensation program for legitimate service as an Authority officer. Act. The propriety of the proposed conduct has only been addressed under the Ethics Conclusion: The Members of the A Authority ( "Authority ") Board are public officials subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Section 1103(a) of the Ethics Act would not prohibit the Authority Board Members from establishing a compensation program for legitimate service as an Authority officer. Officer compensation may not be used as a means to circumvent the requirement of Section 5610(d) of the Municipality Authorities Act that board member salaries be set by the governing body of the municipality. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Confidential Advice, 07 -563 August 2, 2007 Page 5 Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel