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HomeMy WebLinkAbout93-627 KrickTodd R. Krick Pera Agency 222 West Chocolate Avenue Hershey, PA 17033 Dear Mr. Krick: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG. PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL December 30, 1993 93 -627 Re: Conflict of Interest, Public Official, School Board Member, Contracting with Governmental Body, Private Employment, Use of Authority of Office or Confidential Information, Business with which Associated, Public Relations and Advertising Business, Production of School District Newsletter. This responds to your letter of November 26, 1993, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition upon a school director or a "business with which he is associated" from contracting with the school district. Facts: You state that you will soon become a School Board Member in the Palmyra Area School District. You have questions as to doing business with the School District, specifically, producing and distributing the School District's newsletter, CougarCourier. You want to be absolutely certain that you will not be violating the Public Official and Employee Ethics Law. You submit the following as background information. You are in the public relations and advertising business and are the art director /owner of the Pera Agency. After noticing that the School District's newsletter design was hard to read so as to hinder its effectiveness, you approached the Palmyra School Board to make a presentation on how the newsletter could be improved. On July 7, 1993, at a regularly scheduled public meeting of the District's Curriculum Committee, you made a presentation in which you discussed changing the newsletter's format so that the District might foster a more positive image. The Committee authorized you to develop a new format for the newsletter which would be reviewed at the next Curriculum Committee meeting. You agreed to do so at no charge and also to investigate alterative printing and mailing methods. Todd R. Krick December 30, 1993 Page 2 You presented the new format to the Curriculum Committee at their next meeting where you also presented financial data comparing the costs of the "old newsletter" and the "new newsletter ". The Committee reviewed and approved the new design and asked if you would be willing to donate your professional services to produce and coordinate the initial issue of the new CougarCourier at no charge. The Pera Agency did not bill the District for professional services or for out -of- pocket material expenses. Actual printing costs were billed by Kapp Advertising directly to the District. You state that neither Pera Agency nor you received any commission or special consideration from the printer. The Committee's intent was to have the first issue of the new newsletter produced by the Pera Agency and then to use that issue as a standard to solicit bids for the remaining 1993 -94 issues. In return for your donation of services, you requested that you be included in the open bidding process and that a line be inserted in the paper indicating that you and your wife helped underwrite a portion of the cost of the paper. You state that the District's business manager was suddenly hospitalized for emergency surgery and the bidding process was delayed. This created a situation whereby the publication date of the next issue was approaching and sufficient time for the bidding process would not be possible. The School District Superintendent, at the direction of the Board, asked if you would be willing to produce the second issue at no charge. You agreed not to charge for professional services, but requested reimbursement for out -of- pocket expenses. You guaranteed that these expenses would not exceed $225.00 and they actually totalled $115.25. The Superintendent agreed to that arrangement. You state that even with the reimbursement of out -of- pocket expenses, the cost of the new newsletter was less than the old newsletter. Using the first issue of the CougarCourier and its specifications, the District sought bids from numerous local printers, graphic designers and advertising agencies on the production of the remaining 1993 -94 issues. This bid was sent out on October 25, 1993, and Pera Agency was included in the bidding process. The Pera Agency submitted a proposal according to the District's bid request. Subsequent to the bid being sent out, you were elected a School Director and took office on December 9, 1993. You are concerned that if the Pera Agency is awarded the bid, you will be in violation of the Ethics Law. You state your understanding that any business in which a school director is associated may not enter into a contract valued at $500.00 or more with the school district he serves or any subcontract valued at $500.00 or more with any person who has been awarded a contract with the school district he serves, unless the contract has been awarded through an open and Todd R. Krick December 30, 1993 Page 3 public process. In such a case, the school director may not have any supervisory or overall responsibility for the implementation or administration of the contract. You state that to this point, your role in the production of the newsletter has been one of coordinating and laying -out information provided by Mrs. Sandra Pushnik (the Board Member responsible for the production of the newsletter), and the Superintendent. You also schedule the printing and provide the printer with camera ready mechanicals. If Pera Agency is awarded the bid, your involvement in the future will essentially remain the same. You indicate that the proposal submitted by Pera Agency is for reimbursement of out -of- pocket expenses only. You will not accept a fee for your time on this project or for time spent by Pera Agency employees. Printing costs are billed directly to the District by Kapp Advertising at the price that was originally quoted to the Agency at your request. You have submitted copies of your July 7, 1993 presentation to the Curriculum Committee, the Palmyra Area School District's request for bid, the September 1, 1993 CougarCourier newsletter, and Pera Agency's proposal to the District, which documents are incorporated herein by reference. Based upon the above, you request an advisory as to whether you would be in violation of the Ethics Law if Pera Agency was to be awarded the bid. You indicate that you strongly suspect that Pera Agency will be the low bidder considering the fact that you are taking no fee for professional services and will make no profit on the printing. Discussion: As Member of the Palmyra School District, you are a "public official" as that term is defined in the Ethics Law. 65 P.S. 5402; 51 Pa. Code 511.1. As such, you are subject to the provisions of the Ethics Law and the restrictions therein are applicable to you. Section 3(a) of the Ethics Law provides: Restricted Activities No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined under the Ethics Law: "Conflict or conflict of interest." Use Todd R. Krick December 30, 1993 Page 4 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. "Conflict" or "conflict of interest" 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 or 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 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. Under Section 3(a) of the Ethics Law quoted above, a public official may not use the authority of office or confidential information to obtain a private pecuniary benefit for himself, a member of his immediate family or a business with which he is or a member of his immediate family is associated. Generally, the Ethics Law places no per se prohibition upon a public official or business with which he is associated from contracting with his governmental body. Pancoe, Opinion 89 -011. As owner of the Pera Agency, it is clear that the foregoing entity is a "business with which you are associated" as that term is defined under the Ethics Law. Under Sections 3(a), you could not participate or vote on matters involving the contract between the government body and you or the "business with which you are associated." In addition, the requirements of Section 3(j), infra, of the Ethics Law must be followed whereby the reasons for the abstention must be publicly Todd R. Krick December 30, 1993 Page 5 noted as well as a written memorandum to that effect must be filed with the secretary recording the minutes. Therefore, under Section 3 (a) , you or the "business with which you are associated" is not precluded from contracting with your governmental body but you could not participate or vote as to the matter of the contract and must comply with the disclosure requirements of Section 3(j) of the Ethics Law. Section 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Section 3. Restricted activities. (f) 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. 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 an amount of $500 or more. The process must be open and public with prior public notice and subsequent public disclosure. In addition, the public official/ employee may not have any supervisory or overall responsibility for Todd R. Krick December 30, 1993 Page 6 the implementation or administration of the contract. Thus, the open and public process, must be used in all situations where a public official is otherwise appropriately contracting with his own governmental body in an amount of $500 or more. 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. Further, Section 3(f) requires that the public official could not have supervisory or overall responsibility as to the implementation or administration of the contract. Section 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities. (j) 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 Todd R. Krick December 30, 1993 Page 7 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. If a conflict exists, Section 3(j) requires the public official /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 or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Law, then in that event participation is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. Parenthetically, although the contracting in question would not be prohibited under the Ethics Law provided the requirements of Sections 3(a), (f) and (j) are satisfied, a problem may exist as to such contracting under the respective code. 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. Since such contracting may be prohibited by the above quoted provision of the Code, but not under the Ethics Law, it is suggested that advice in that regard be sought from the municipal solicitor or from private counsel. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other Todd R. Krick December 30, 1993 Page 8 than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed in this advice is the applicability of the respective code. Conclusion: As a Member of the Palmyra Area School District, you are a public official subject to the provisions of the Ethics Law. Under Section 3(a) of the Ethics Law, a public official /employee or a "business with which you are associated" may contract with the governmental body but could not vote or participate in the matter of the contract. The disclosure requirements of Section 3(j) outlined above must be observed. Finally, if the contract is $500 or more, the open and public process as outlined above must be accomplished. The public official /employee could not have any supervisory or overall responsibilities as to the contract. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Due to the possible application of the above referenced code in this matter, it is suggested that advice be obtained from the municipal solicitor or private counsel in that regard. Pursuant to Section 7(11), 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. such. This -letter is a public record and will be made available as 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 fifteen (15) days of the date of this Advice pursuant to 51 Pa.Code 513.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717- 787 - 0806). Vincent J. Dopko Chief Counsel