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HomeMy WebLinkAbout83-611 MillerMr. Walt Miller Wattsburg Area Sports Corporation 5837 Morehouse Road Erie, PA 16509 Re: Wattsburg Area Sch000l District, Sports Corporation Dear Mr. Miller: Malting Address STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 November 18, 1983 ADVICE OF COUNSEL 83 611 This responds to your letter received October 29, 1983, in which you requested advice from the State Ethics Commission. Issue: You ask what restrictions would be imposed upon you if you are successful in your bid for election as a member of the Board of Education of the Wattsburg Area School District and your position as a member of a sports corporation. Facts: You were a candidate (successful) for election to the Board of Education of the Wattsburg Area School District, hereinafter the District. You will assume office in the District in December, 1983. For some time you have been involved in a corporation known as the Wattsburg Area Sports Corporation, hereinafter the Corporation. This Corporation is a non - profit corporation whose purpose is to insure that the students of the District have the opportunity to participate in interscholastic athletics and in such programs because the District no longer provides these activities. The Corporation has a contract with the District to provide these services. The provisions of that contract state that the Corporation will sponsor athletic teams, hire coaches, set their salaries and assume other responsibilities for sporting events. However, the Board of Education of the District, particularily the Athletic Committee, is designated to insure that the programs conducted by the Corporation are in conformity with the rules, regulations, and policies of the Pennsylvania Interscholastic Athlethic Association as well as with those of the School District. The contract further provides that the members of the Board of the District will control all matters pertaining to interscholastic athletic relations and that the Board has the right to exclude any contestant or coach and has the right to approve the hiring of any coach. It should be noted, however, that all State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Mr. Walt Miller November 18, 1983 Page 2 coaches in the programs run by the Corporation are considered employees of the Corporation and not the District and that their salaries as coaches are set by the Corporation. Currently, the Corporation has approximately 32 coaches and you serve as one of the coaches. As such you are paid for your coaching activities. Additionally, literature of the Corporation indicates that you are the "Founder and President ". The Corporation, at present, funds and operates the wrestling program with 172 wrestlers, program of youth basketball in which 184 students participate, a youth football program in which 45 students participate and a floor hockey program in which 20 players participate. Discussion: As an elected Director in the District you come within the definition of "public official" as that term is defined in the Ethics Act. See 65 P.S. 402. As such, your conduct must conform to the requirements of the Ethics Act. Initially, I note that you ask several questions which are not within the jurisdiction of the Ethics Act and to which we can make no response. Specifically, you ask whether a candidate for School Board may place a political campaign billboard on school property; and whether there are any regulations concerning campaigning on or use of school property; whether the District is handling this "situation" in a manner which is "fair or professional ". These questions are not within the jurisdiction of the Ethics Act and with specific reference to the use of school property for campaign, political or other purposes, you are referred to the School District itself and the Solicitor for the School District. In responding to the questions which are within our jurisdiction, we begin by noting the provisions of Section 3(c) of the Ethics Act as follows: (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body 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. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c) While the provisions of Section 3(c) of the Ethics Act regulate, to some degree, the conduct of a public official and a business in which he serves as an officer, we must determine first and foremost whether the Corporation in Mr. Walt Miller November 18, 1983 Page 3 this case is a "business" as that term is defined in the Ethics Act. A "business" is defined in the Ethics Act as follows: "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. 65 P.S. 402. From this definition it is clear that the Corporation, because it is not an entity organized for profit, cannot be considered a "business" as that term is used in the Ethics Act or in Section 3(c) in particular. Thus, there is not requirement, strictly speaking, that the requirements of Section 3(c) be imposed if the District does or wishes to contract with the Corporation. In addition, this Commission has indicated that if the contract in question pre -dates an individual's entry into public service, then the requirements of Section 3(c) should not be applied to require the termination or discontinuation of a contract which pre -dated the public official's assumption of public office. See Coon, 79 -016. Thus, even if Section 3(c) of the Ethics Act could be applied to require the contract between the District and the Corporation to be made only after an open and public process was undertaken, in the facts as set forth above, because the contract between the District and the Corporation pre -dated your entry into public office, the continuation of the contract would be proper. Likewise, if the contract were to be terminated and /or renegotiated or renewed based upon the discussion above there would be no requirement that Section 3(c) of the Ethics Act be applied to require that the contract be renewed or awarded only after an open and public process had been undertaken because the Corporation is not a "business for profit and, thus, not within the scope of that term as set forth in the Ethics Act. Eventhough Section 3(c) of the Ethics Act is not, strictly speaking, applicable to this situation, there are other provisions of the Ethics Act that we must review in order to guide your conduct under the Ethics Act. Specifically, the provisions of Section 3(a) as set forth below should be reviewed: (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). Mr. Walt Miller November 18, 1983 Page 4 Section 3(a) of the Ethics Act applies to your conduct as a public official vis -a -vis a "business" with which you are "associated" as that term is defined in the Ethics Act as follows: 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'holder of stock. 65 P.A. 402. The Corporation as set forth above is a non - profit entity and should not be considered a "business" in general. However, we must also consider that the general purpose of the Ethics Act as set forth in Section 1 of the Ethics Act was to insure that the financial interests of the holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. Even if the Corporation is not an entity organized for profit and may not be a "business" with which you are "associated" as defined in the Ethics Act, it is clear that if the Corporation continues to exist and provide services to the District you would have a financial interest in this outcome because of your status as a coach with the Corporation. Accordingly, even though the Corporation is not a "business" you would be in a position, as a Director of the District, to influence the District's decisions to continue or renew or renegotiate the contract with the Corporation. Such a continuation, renewal or renegotiation would or might have an effect upon your status as a director or employee of the Corporation. Therefore, under the requirement of Section 1 of the Ethics Act which does not appear to be restricted in its application by reference to a "business" as is Section 3(c) or Section 3(a), we must conclude that you may not participate in the District's decisions vis -a -vis the Corporation. See Grove, 83 -013. In the present situation, the precedent of the Commission indicates that the fact that the Corporation is a non - profit entity does not preclude the possibility that an official may be required under Section 1 to abstain from participating in those discretionary decisions and matters presented by the Corporation to the entity on which the official serves. Thus, in this case, in order to achieve the goal of assuring the public that the financial interests of public officials present neither a conflict nor an appearance of a conflict with the public trust you should not participate in the decisions of the District, discussions of the District, or official actions of the District with respect to the Corporation or this contract. Otherwise, there are no restrictions under the Ethics Act in your continuing to serve as a director of the Corporation or a wrestling coach of the Corporation. Conclusion: Under Section 3(c) of the Ethics Act any contract between the District and the Corporation would not be required to be awarded only after an Mr. Walt Miller November 18, 1983 Page 5 open and public process. There is no requirement that the existing contract between the District and the Corporation which pre -dated your entry into public service must be terminated. Under Section 3(a) of the Ethics Act the Corporation would not be considered a "business" in which you are "associated" as those terms and phrases are defined in the Ethics Act. However, you should abstain from official votes, discussions, etc. on the District's decisions relative to the Corporation and this contract in order to comply with Section 1 of the Ethics Act. Otherwise, there are no restrictions under the Ethics Act on your continuing to serve as a Director and wrestling coach of the Corporation. 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. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may requst 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. SSC /alm This letter is a public record and will be made available as such. Sincerely, Sandra S. Christianson wry General Counsel