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HomeMy WebLinkAbout09-515 NESTLERODEDear Ms. Nestlerode: ADVICE OF COUNSEL Roxie Nestlerode, Director Early Development and Education Institute PennState S -24 Henderson Building University Park, PA 16802 March 6, 2009 09 -515 This responds to your letter dated January 5, 2009 (postmarked January 20, 2009, and received January 21, 2009) by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., would impose any prohibitions or restrictions upon a member of the Pennsylvania Early Learning Council, who in a private capacity is employed as the Director of the Early Development and Education Institute of the Pennsylvania State University, with regard to: (1) administering a subcontract that such employer has with an entity that has been awarded a contract with the Pennsylvania Department of Public Welfare; and (2) accepting payments for presenting workshops, including workshops for organizations that receive funding for professional development events through programs of the Pennsylvania Department of Public Welfare. Facts: You have requested an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. In November 2008, you were appointed to the Pennsylvania Early Learning Council ( "the ELC ") by Governor Edward G. Rendell. However, you have not accepted your commission or taken the oath of office. In a private capacity, you are the Director of the Early Development and Education Institute ( "the Institute ") of the Pennsylvania State University. You state that the Institute's main project is the provision of professional development events within the Commonwealth. The Institute holds a subcontract ( "the Subcontract ") from the Central Regional Key to provide professional development events for early care and education teachers. The Subcontract is part of a contract that the Central Regional Key has with the Pennsylvania Department of Public Welfare ( "DPW "). You state that you are responsible for administering the Subcontract and teaching several of the workshops and class series. Nest!erode, 09 -515 March 6, 2009 Page 2 You have submitted copies of the Subcontract for fiscal year 2008 -2009 and an amendment to the Subcontract, both of which documents are incorporated herein by reference. You further state that you present workshops for various organizations that receive funding for professional development events through programs of DPW, such as, for example, "Pre -K Counts," "Keystone STARS," and "Community Engagement Groups." You state that such organizations do not contract with presenters for the workshops but rather give the presenters fees and honoraria. Based upon the above submitted facts, you pose the following specific inquiries: 1. Whether your role as an administrator of the Subcontract would conflict with Section 1103(f) of the Ethics Act (pertaining to contracting); and 2. Whether your role as an instructor for the aforesaid workshops would conflict with Section 1103(d) of the Ethics Act (pertaining to honoraria). 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. Upon taking office as a Member of the ELC, you would become a public official subject to the provisions of the Ethics Act. See, Buenaventura, Advice 09 -512. 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 Nest!erode, 09 -515 March 6, 2009 Page 3 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 related to Section 1103(a) 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 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. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 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. Subject to certain statutory exceptions, in each instance of a voting conflict, Section Nest!erode, 09 -515 March 6, 2009 Page 4 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. It is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position - -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity or private client(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. If a private employer or business with which the public official /public employee is associated or a client of the private employer or business would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, supra. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa. C. S. § 1103(f). The term "contract" is defined in the Ethics Act as follows: § 1102. Definitions Nest!erode, 09 -515 March 6, 2009 Page 5 "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 1103(d) of the Ethics Act provides as follows: § 1103. Restricted activities. (d) Honorarium. - -No public official or public employee shall accept an honorarium. 65 Pa.C.S. § 1103(d). The Ethics Act defines the term "honorarium" and the related term "de minimis economic impact" as follows: § 1102. Definitions "Honorarium." Payment made in recognition of published works, appearances, speeches and presentations and which is not intended as consideration for the value of such services which are nonpublic occupational or professional in nature. The term does not include tokens presented or provided which are of de minimis economic impact. "De minimis economic impact." An economic consequence which has an insignificant effect. 65 Pa.C.S. § 1102. Section 1103(d) of the Ethics Act is an absolute prohibition against accepting honoraria. The question of whether a given payment is an honorarium prohibited by Section 1103(d) is determined by an application of the statutory definition set forth in the Ethics Act, not by the mere label that may have been attached to the payment. Nest!erode, 09 -515 March 6, 2009 Page 6 Confidential Opinion, 01 -001. The statutory definition of "honorarium" generally includes payments which are made in recognition of speaking engagements /presentations, appearances, and published works, but excludes such payments if: (1) they are legitimately intended as consideration for the value of such services; and (2) they are undertaken in the public official's /public employee's private professional or occupational capacity and are not related to the public position. Id. In Baker, Opinion 91 -004, the State Ethics Commission set forth criteria for determining whether the exclusion applies in any given instance, which criteria include the following: the private occupation of the public official /public employee; the expertise of the public official /public employee in the area; the history of activity in the occupation prior to public service; the purpose for the invitation; the capacity in which the public official /public employee is invited; the subject of the speech, work or presentation; the group spoken to and the composition as to members or non - members of the group; the purpose for gathering the group; the amount of the fee relative to the services performed; the source of the invitation; the event at which the speech is given; the subject matter of the speech or published work as compared to the normal subject matter dealt with by the occupational/ professional group and any other relevant factors. See also, Confidential Opinion, 01 -001. Having established the above general principles, your specific inquiries shall now be addressed. In response to your first specific inquiry, you are advised as follows. Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as a Member of the ELC, you would have a conflict of interest in matters that would financially impact you, a business with which you are associated, or the customer(s) /client(s) of a business with which you are associated. See, Kannebecker, supra; Miller, supra. The Pennsylvania State University is a business with which you are associated in your capacity as Director of the Institute. Cf., Novak, Opinion 91 -009. To the extent the Pennsylvania State University would contract with the ELC, or would subcontract with a person awarded a contract with the ELC, and the value of the Pennsylvania State University's contract /subcontract would be $500 or more, the restrictions of Section 1103(f) of the Ethics Act would be applicable. Based upon the submitted facts, the restrictions of Section 1103(f) would not apply to the Subcontract. With regard to your second specific inquiry, the submitted facts do not indicate the subject matter of all of the various workshops that you would teach. Therefore, this advisory must necessarily be limited to providing the following general guidance. To the extent that a particular workshop presentation would be given in your private capacity as the Director of the Institute and would not be related to your public capacity as a Member of the ELC, a payment that would be legitimately intended as consideration for the value of such services would not constitute an "honorarium" as that term is defined by the Ethics Act, and you would be permitted to accept such payment subject to the restrictions of Section 1103(a) of the Ethics Act. However, to the extent that a particular workshop presentation would be related to your public position as a Member of the ELC, a payment for such presentation would constitute an honorarium prohibited by Section 1103(d) of the Ethics Act. A workshop that would be related to the work of the ELC would be considered related to your public position as a Member of the ELC, such that you would be prohibited from accepting an honorarium for such workshop. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Governor's Code of Conduct. Conclusion: Upon taking office as a Member of the Pennsylvania Early Learning Nest!erode, 09 -515 March 6, 2009 Page 7 Council ( "the ELC "), you would become a public official subject to the provisions of the Public Official and Employee Ethics Act (the "Ethics Act "), 65 Pa.C.S. §1101 et seq. Based upon the submitted facts that: (1) in a private capacity, you are the Director of the Early Development and Education Institute ( "the Institute ") of the Pennsylvania State University; (2) the Institute's main project is the provision of professional development events within the Commonwealth; (3) the Institute holds a subcontract ( "the Subcontract ") from the Central Regional Key to provide professional development events for early care and education teachers; (4) the Subcontract is part of a contract that the Central Regional Key has with the Pennsylvania Department of Public Welfare ( "DPW "); (5) you are responsible for administering the Subcontract and teaching several of the workshops and class series; (6) you also present workshops for various organizations that receive funding for professional development events through programs of DPW, which organizations do not contract with presenters for the workshops but rather give the presenters fees and honoraria, you are advised as follows. Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in your capacity as a Member of the ELC, you would have a conflict of interest in matters that would financially impact you, a business with which you are associated, or the customer(s) /client(s) of a business with which you are associated. The Pennsylvania State University is a business with which you are associated in your capacity as Director of the Institute. To the extent the Pennsylvania State University would contract with the ELC, or would subcontract with a person awarded a contract with the ELC, and the value of the Pennsylvania State University's contract /subcontract would be $500 or more, the restrictions of Section 1103(f) of the Ethics Act would be applicable. Based upon the submitted facts, the restrictions of Section 1103(f) would not apply to the Subcontract. To the extent that a particular workshop presentation would be given in your private capacity as the Director of the Institute and would not be related to your public capacity as a Member of the ELC, a payment that would be legitimately intended as consideration for the value of such services would not constitute an "honorarium" as that term is defined by the Ethics Act, and you would be permitted to accept such payment subject to the restrictions of Section 1103(a) of the Ethics Act. However, to the extent that a particular workshop presentation would be related to your public position as a Member of the ELC, a payment for such presentation would constitute an honorarium prohibited by Section 1103(d) of the Ethics Act. A workshop that would be related to the work of the ELC would be considered related to your public position as a Member of the ELC, such that you would be prohibited from accepting an honorarium for such workshop. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, 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 Nest!erode, 09 -515 March 6, 2009 Page 8 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