HomeMy WebLinkAbout87-634 PerrySTATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PA 17120
TELEPHONE: (717) 783 -1610
November 30, 1987
ADVICE OF COUNSEL
Mr. Wayne Perry 87 -634
3104 Trapper Drive
Library, PA 15129
Re: Conflict of Interest, School Director, Contracting with District
Dear Mr. Perry:
This responds to your letter of October 21, 1987, in which you requested
advice from the State Ethics Commission.
Issue: Whether the State Ethics Act presents any prohibitions upon a school
district's contracting with a company whose corporate officer is one of the
members of the school board.
Facts: You state that you were elected to the School Board of South Park in
November, 1985, and shortly thereafter you took over the "Park News" which
published information at no charge to the South Park School District,
hereafter District. You further state that the District had been using the
"Park News" to publish District information to the residents of the township,
such as the minutes of the Board meetings, bus schedules and "Chalk Talk," a
quarterly newspaper. It is further stated by you that there is currently a
loss of information to the public because "Chalk Talk" has not been issued
since mid 1985. You also state that the "Park News" is no longer in a
financial position to donate services to the District. You then summarize by
stating that the District needs to supply information to the public, the "Park
News" is the most economical way to do it and contracts could be handled on a
quarterly basis with no special advantage to the "Park News." You then
conclude by stating that you would not be doing business with the District as
a person under Section 324 of the Public School Code and ask this Commission
whether a company of which you would be an officer may transact business with
the District.
Discussion: Initially, it should be noted that as a member of a school board,
you are a "public official" as that term is defined in the State Ethics Act.
65 P.S. §402. As such, your conduct must conform to the requirements of that
law. Weaver, 85 -014; Jersey Shore Area School District v. Ritner, 81 Pa.
Commw. Ct. 30, 472 A.2d 1183, (1984).
Generally, the State Ethics Act places no per se or absolute prohibition
upon a public official's employment in a business that contracts with his
governmental body.
Mr. Wayne Perry
November 30, 1987
Page 2
The Act does, however, provide as follows:
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).
Within the above provision of law, no public official may use his
position or any confidential information obtained therein in order to obtain a
financial gain for himself or a business with which he is associated. The Act
defines business with which one is associated as follows:
Section 2. Definitions.
"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.S. 402.
As an officer of Perry Publications, you are clearly associated with that
business within the above provision of law and, therefore, may not use that
position in order to obtain a financial gain for that corporation. Generally,
under Section 3(a), such would require that you not participate in any of the
school district's decisions or actions relating to purchases made from this
particular entity. This would include abstention in deciding from where the
journalistic services should be sought, and the amount to be paid. Similarly,
you should abstain from participating in the school district's expenditures
and payments to this company; your abstention, in such matters, should be
publicly noted and appropriately recorded in school district records. See,
Sowers, 80 -050; Welz, 86 -001.
In addition to the foregoing, this Commission has also held, in the past,
that a public official within the above provision of the State Ethics Act may
not, through his public position, receive any financial gain to which he is
not entitled. Domalakes, 85 -010. In this respect, the Commission has
determined if a particular statutory enactment prohibits an official receipt
of a particular benefit, then that official's receipt of such a prohibited
benefit, in and through his public office, would also be a use of his office
in violation of the Act. In this respect, this Commission has been called
Mr. Wayne Perry
November 30, 1987
Page 3
upon, on various occasions, to determine whether a specific benefit or
financial gain is prohibited by law. See, Allen, 86 -518. In order to
determine whether a particular benefit or gain is strictly prohibited by law,
the provisions of the enabling legislation of the governmental body in
question must be reviewed. In the instant situation, the Public School Code
provides as follows:
No school director shall, during the term of which he was
elected or appointed, as a private person engage 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:
24 P.S. §3 -324.
The Public School Code does not appear to contain any exception to the
above provisions that is applicable in the instant situation. This Commission
has, in the past, determined that where a school board member owns, operates,
or has a vested financial interest in a business entity, that entity would be
prohibited from receiving compensation for providing services or transacting
business with the school district pursuant to the above provision
of law. See, Weaver, 85 -014. In the instant situation, you are a corporate
officer of Perry Publications. Holding a position of this nature, in a
particular business entity, is usually of such a substantial nature that the
individual therein must be considered to be in a position of more than a mere
employee. Because of this relationship, you are in the type of position with
the business entity that would appear to implicate the above provision of law.
As such, and based upon the prior rulings of the this Commission, your
business, Perry Publications, would appear to be prohibited from receiving any
funds from the school district for services rendered or in relation to any
other business transaction. Because that financial gain appears to be
prohibited by law, then your receipt of this financial gain in and through
your public position, would also appear to be prohibited by Section 3(a) of
the State Ethics Act. See, Fyda, No. 438 -R.
In addition to the foregoing, the State Ethics Act provides as follows:
Section 3. Restricted activities.
(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
Mr. Wayne Perry
November 30, 1987
Page 4
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).
In relation to the above provision of law, the State Ethics Commission
has generally determined that this provision is a procedure to be used when a
public official or employee contracts with his own governmental body in excess
of $500. Bryan, 80 -014; Lynch, 79 -047. The Commission, however, has also
determined that the above provision of law is not a general authorization for
a public official to contract with his own governmental body where such is
otherwise prohibited by law. The above provision of law clearly is intended
to be a procedure to be utilized where contracting is otherwise allowed by
law. For example, if a particular business transaction was prohibited under
Section 3(a) of the State Ethics Act, this particular provision of law would
not authorize that transaction. Additionally, if a particular municipal code
prohibits a public official from being interested in a contract, this
provision would not allow that interest.
Parenthetically, where contracting is otherwise allowed or where there
appears to be no expressed prohibition to such contracting, the above
particular provision of law would require that an additional procedure be
utilized when such business is transacted. This procedure, the open and
public process, must be used in all situations were a public official is
otherwise appropriately contracting with his own governmental body in excess
of $500. This open and public process would require:
(1) prior public notice of the employment or contracting possibility;
(2) sufficient time for a reasonable and prudent competitor /applicant to
be able to prepare and present an application or proposal;
(3) public disclosure of all applications or proposals considered and;
(4) public disclosure of the contract awarded and offered and accepted.
See, Cantor, 82 -004.
Mr. Wayne Perry
November 30, 1987
Page 5
Thus, in the event that contracting would be allowed, the above process
must be employed.
Conclusion: As a school board member, you are a public official subject to
the provisions of the Ethics Act. Based upon the information provided herein,
the Ethics Act would prohibit a business in which a school board member is a
corporate officer from receiving any financial gain that is strictly
prohibited by law. A member of a school board, who received such compensation
for his business entity, would be receiving a financial gain that is strictly
prohibited by law. Such would, thus, be received in and through his public
office and would not be in accord with the State Ethics Act.
Parenthetically, in the event that there had been no such prohibition
upon the receipt of this compensation, then the Ethics Act, generally, would
not have precluded in and of itself this contracting possibility. However,
the school board member could not participate in any actions relating to the
school district's employment of this particular company and all contracting or
business transactions with such company must be accomplished through an open
and public process as set forth above.
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.
VJD /na
Sincerely,
Vincent . Dopko,
General Counsel