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Home My WebLink About85-507 KautzWilliam D. Kautz 340 Oak Drive New Cumberland, PA 17070 STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 January 17, 1985 ADVICE OF COUNSEL 85 -507 Re: Private Business School, Department of Education Employee Dear Mr. Kautz: This responds to your letter of November 29, 1984, in which you requested advice from the State Ethics Commission. Issue: You ask whether you may plan and develop a private business school in anticipation of your retirement from service as an employee with the Department of Education, hereinafter the Department. Facts: You indicate that you currently serve as the Director of the Bureau of Academic Programs, hereinafter the Bureau, within the Department. Due to a reorganization within the Department in 1983, the Board of Private Business Schools, hereinafter the Board, was placed within the Bureau and as such, you are primarily responsible for its administrative work. You are planning to retire from your state civil service postion in July, 1985. In anticipation of this event your wife and you have formed a corporation to pursue several business interests in the education field. You plan to develop several programs for parents and students which you will market sometime in the latter part of 1986. In addition, you plan to develop a Private Business School, hereinafter the School to assist people in obtaining employment as office workers. You also plan to train these persons for micro - computer jobs. Such a School as the one you contemplate will have to be licensed by the Board. The regulations of the Board are clear in terms of the conditions which must be met to receive a license to operate such a School. The decision on licensing is made by the Board at a public meeting. The Board will meet again in May, 1985 but will not meet thereafter until August, 1985. Therefore, it William D. Kautz January 17, 1985 Page 2 is necessary to do a considerable amount of preliminary work in preparing a building, buying the necessary equipment, hiring teachers and so forth prior to your anticipated retirement date of July, 1985 so that the School may begin to receive students in September 1985. In order to meet this anticipated opening date, an application must be presented to the Board at its May meeting. You anticipate that your wife, who will be president of the School and a person hired by the director of the School would appear before the Board to answer any questions concerning the application for the School which must be presented to the Board. With respect to this application, you would request that your supervisor in the Department manage the application and undertake whatever reviews and recommendations are necessary with respect to this application and you would disqualify yourself from any activity regarding this application. Given the above situation and circumstances however, you ask our advice as to whether your contemplated activity is permissible under the Ethics Law. Discussion: We will assume, for purposes of this advice and response, that in your capacity as Director of the Bureau you are considered a "public employee" or "public official" as those terms are defined in the State Ethics Act. See Section 2, State Ethics Act, 65 P.S. 402. As a public official and /or employee your conduct must conform with the provisions of the State Ethics Act. The most pertinent provision of the State Ethics Act is Section 3(a) which provides that: Section 3. Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Of course, under this provision and in order to comply with its requirements you should not use your public office to secure any financial gain for the School. Likewise, you should not use any confidential information which you might gain through your holding of your public office or employment, to sponsor, assist, or enhance the potential that School's application will be favorably considered. In this response we assume that such use of confidential information has not occurred and will not occur throughout the processing of this School's application. William D. Kautz January 17, 1985 Page 3 After stating the above restrictions, we can also state that the Ethics Act does not per -se prohibit or declare incompatible the activities that you outline above. Specifically, the Ethics Act does not state that it is inherently incompatible for a public official or a public employee to also undertake the business enterprise which you outlined above. The main prohibition under the Ethics Act and the opinions of the Ethics Commission is that you may not simultaneously serve the interests of two persons, groups, or entities whose interests may be adversed. See Alfano, 80 -007. Likewise, the opinions of the Ethics Commission indicate that the Ethics Act was not designed, nor should it be interpreted to proclude, public officials or public employees from participating in activities which they might otherwise be able to participate in as members of the public or as private citizens. See Toohey, 83 -003. However, while there is no inherent incompatibility in undertaking activities or participating in programs which might otherwise be available to members of the general public, the Commission has established criteria by which public officials and public employees, must be guided. Specifically, in cases where the Ethics Commission has indicated that a public official or public employee could participate in a rehabilitation or grant program, for example, the Commission cautioned that such participation was permissible so long as the public official or public employee; 1) played no role in establishing the criteria under which the program was to operate, particularly with reference to the structure or administration of the program; 2) played no role in establishing or implementing the criteria by which selection for program participation are to be or were made; 3) played r►o role in the process of selecting or reviewing applicants or in awarding grants or funds; 4) use no confidential information acquired during the holding of public office or public employment to aply for or to obtain such funds, grants, etc. Under the present circumstances the foregoing criteria must be observed. If the aforementioned guidelines are followed, and if, as you indicate, you abstain from participating in any manner or to any degree in the processing, review, or recommendation of the School's license application, you should be able to avoid conflict of interests under the Ethics Act. Conclusion: Neither the Ethics Act nor rulings of the Ethics Commission reveal any reason to per -se prohibit you from undertaking the activity outlined above. So long as your conduct conforms to the guidelines discussed above you may undertake this activity in anticipation of your retirement from the Department. If these guidelines are met you should encounter neither a conflict nor an appearance of a conflict with the public trust under the Ethics Act. William n. Kautz January 17, 1985 Page 4 Pursuant to Section 7(9)(ii), this 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, providing the requestor 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. JJC /sfd Sincerely, John J.,- Contino General Counsel ♦TJ fG!//ty��