HomeMy WebLinkAbout14-514 Confidential
ADVICE OF COUNSEL
April 2, 2014
14-514
This responds to your letter dated February 6, 2014, by which you requested a
confidential 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 prohibitions or restrictions upon an individual
serving as a school director, who in a private capacity is an occasional employee of an
entity which provides A to other entities, with regard to: (1) performing services on
behalf of the entity as a B in the school district; or (2) participating as a school director in
matter(s) pertaining to a contract between the school district and the entity.
Facts:
As Solicitor for the [name of school district] (“School District”), you request
a confidential advisory from the Pennsylvania State Ethics Commission on behalf of
Individual C, who is a School Director for the School District. You have submitted facts,
the material portion of which may be fairly summarized as follows.
On [date], the School District School Board (“School Board”) approved a contract
(“the Contract”) with an entity named [name of entity] (“the Entity”), which provides A to
other entities, including school districts. The Contract remains in effect and will continue
to do so until terminated by either party following thirty days written notice.
Individual C was elected as a School Director in [month, year], and she was
sworn into office on [date].
In a private capacity, Individual C is an occasional employee of the Entity.
Before Individual C began serving as a School Director, she at times performed
services on behalf of the Entity as a B in the School District. Individual C has the ability
to accept or reject Ds offered to her by the Entity, and in the past, she accepted Ds only
at the School District because of E.
Individual C has not accepted any Ds as a B in the School District or performed
any services for the Entity since she began serving as a School Director. You state that
Individual C has never had and does not currently have any supervisory or overall
responsibility for the implementation or administration of the Contract. You further state
that Individual C is neither employed by the School District nor a member of the
bargaining unit within the School District and that she does not receive compensation or
benefits from or through the School District.
Confidential Advice, 14-514
April 2, 2014
Page 2
The School Board agenda typically includes a motion for approval of the F. The
F includes a list of all Gs to which payments were previously made by the School
District as well as general fund reporting and reports on other fiduciary and school funds
and accounts.
You state that Individual C has not participated in any School Board vote or
action directing any payment to the Entity by the School District. You further state that
no School Board vote or action relating to the existence, continuation, termination, or
terms of the Contract has occurred thus far during Individual C’s tenure as a School
Director.
Based upon the above submitted facts, you pose the following questions:
(1) Whether the Ethics Act would permit Individual C to be occasionally
employed by the Entity and perform services on behalf of the Entity as a B
in the School District while serving as a School Director, and if so, under
what limitations or restrictions; and
(2) If the Ethics Act would permit Individual C to perform such services while
serving as a School Director, whether she would be permitted to vote on
the approval of Fs which might reference prior ledger payments made to
Gs, including the Entity.
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.
As a School Director for the School District, Individual C is a public official 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
Confidential Advice, 14-514
April 2, 2014
Page 3
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
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.
Section 1103(a) of the Ethics Act 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
Confidential Advice, 14-514
April 2, 2014
Page 4
89-011. Examples of conduct that could form the basis for a conflict of interest under
Section 1103(a) of the Ethics Act would include the pursuit of a private business
opportunity in the course of public action (Metrick, Order 1037) and 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). 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. The abstention requirement would not be
limited merely to voting, but would extend 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 1103(j) of the Ethics Act would require 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.
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
"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.
Confidential Advice, 14-514
April 2, 2014
Page 5
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 provides 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.
It is administratively noted that the Public School Code of 1949 as amended
(“Public School Code”) provides in pertinent part:
§ 3-324. Not to be employed by or do business with
district; exceptions
(a) No school director shall, during the term for which he
was elected or appointed, as a private person engaged in
any business transaction with the school district in which he
is elected or appointed, be employed in any capacity by the
school district in which he is elected or appointed, or receive
from such school district any pay for services rendered to the
district except as provided in this act…
….
(c) It shall not be a violation of this section for a school
district to contract for the purchase of goods or services from
a business with which a school director is associated to the
extent permitted by and in compliance with 65 Pa.C.S. Ch.
11 (relating to ethics standards and financial disclosure).
24 P.S. §§ 3-324(a), (c). On its face, Section 3-324(c) of the Public School Code
permits contracting between school districts and businesses with which school directors
are associated as long as the requirements of the Ethics Act are observed.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows. The Entity is a business with which Individual C is associated in her
capacity as an employee. Pursuant to Section 1103(a) of the Ethics Act, Individual C
generally would have a conflict of interest as a School Director in matter(s) before the
School Board that would financially impact her or the Entity.
In response to your specific questions, you are advised as follows.
Section 1103(a) of the Ethics Act would not prohibit Individual C, in her private
capacity as an employee of the Entity, from performing services on behalf of the Entity
as a B in the School District while serving as a School Director for the School District.
However, in her public capacity as a School Director, Individual C would have a conflict
of interest pursuant to Section 1103(a) of the Ethics Act with regard to matter(s)
pertaining to the Entity or the Contract, including but not limited to overseeing work
performed by the Entity relative to the Contract or participating in matter(s) involving
renewal(s) of the Contract or future contract(s) between the School District and the
Entity. Individual C would further have a conflict of interest with regard to voting to
approve payment(s) to the Entity or Fs that would include prior ledger payments made
to the Entity.
Confidential Advice, 14-514
April 2, 2014
Page 6
In each instance of a conflict of interest, Individual C would be required to abstain
from participation, which would include voting unless one of the statutory exceptions of
Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure
requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event
of a voting conflict.
You are further advised that the restrictions and requirements of Section 1103(f)
of the Ethics Act would have to be observed whenever applicable. Section 1103(f)
would not be applicable to the current Contract given that the Contract was not entered
into at a time when Individual C was serving as a School District School Director. Cf.,
Shipley, Advice 11-559; Bowers, Advice 07-588; Nicholson, Advice 04-544; Confidential
Advice, 03-546. However, renewal(s) of the Contract or future contract(s) between the
School District and the Entity would be subject to the restrictions and requirements of
Section 1103(f) of the Ethics Act to the extent that: (1) Individual C would be a School
District School Director; and (2) the Entity would remain a business with which
Individual C is associated.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act.
Conclusion:
As a School Director for the [name of school district] (“School
District”), Individual C is a public official subject to the provisions of the Public Official
and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. Based upon the
submitted facts that: (1) on [date], the School District School Board (“School Board”)
approved a contract (“the Contract”) with an entity named [name of entity] (“the Entity”),
which provides A to other entities, including school districts; (2) the Contract remains in
effect and will continue to do so until terminated by either party following thirty days
written notice; (3) Individual C was elected as a School Director in [month, year], and
she was sworn into office on [date]; (4) in a private capacity, Individual C is an
occasional employee of the Entity; (5) before Individual C began serving as a School
Director, she at times performed services on behalf of the Entity as a B in the School
District; (6) Individual C has the ability to accept or reject Ds offered to her by the Entity,
and in the past, she accepted Ds only at the School District because of E; (7) Individual
C has not accepted any Ds as a B in the School District or performed any services for
the Entity since she began serving as a School Director; (8) Individual C has never had
and does not currently have any supervisory or overall responsibility for the
implementation or administration of the Contract; (9) Individual C is neither employed by
the School District nor a member of the bargaining unit within the School District, and
she does not receive compensation or benefits from or through the School District; (10)
the School Board agenda typically includes a motion for approval of the F; (11) the F
includes a list of all Gs to which payments were previously made by the School District
as well as general fund reporting and reports on other fiduciary and school funds and
accounts; (12) Individual C has not participated in any School Board vote or action
directing any payment to the Entity by the School District; and (13) no School Board
vote or action relating to the existence, continuation, termination, or terms of the
Contract has occurred thus far during Individual C’s tenure as a School Director, you
are advised as follows.
The Entity is a business with which Individual C is associated in her capacity as
an employee. Pursuant to Section 1103(a) of the Ethics Act, Individual C generally
would have a conflict of interest as a School Director in matter(s) before the School
Board that would financially impact her or the Entity. Section 1103(a) of the Ethics Act
would not prohibit Individual C, in her private capacity as an employee of the Entity,
from performing services on behalf of the Entity as a B in the School District while
serving as a School Director for the School District. However, in her public capacity as
a School Director, Individual C would have a conflict of interest pursuant to Section
1103(a) of the Ethics Act with regard to matter(s) pertaining to the Entity or the Contract,
Confidential Advice, 14-514
April 2, 2014
Page 7
including but not limited to overseeing work performed by the Entity relative to the
Contract or participating in matter(s) involving renewal(s) of the Contract or future
contract(s) between the School District and the Entity. Individual C would further have a
conflict of interest with regard to voting to approve payment(s) to the Entity or Fs that
would include prior ledger payments made to the Entity. In each instance of a conflict of
interest, Individual C would be required to abstain from participation, which would
include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act
would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the
Ethics Act would have to be satisfied in the event of a voting conflict.
The restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed whenever applicable. Section 1103(f) would not be applicable to the
current Contract given that the Contract was not entered into at a time when Individual
C was serving as a School District School Director. However, any renewal(s) of the
Contract or future contract(s) between the School District and the Entity would be
subject to the restrictions and requirements of Section 1103(f) of the Ethics Act to the
extent that: (1) Individual C would be a School District School Director; and (2) the
Entity would remain a business with which Individual C is associated. 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 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