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HomeMy WebLinkAbout96-509-S ConfidentialSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL May 20, 1996 96 -509 -S Re: Conflict, Public Official /Employee, County Board of Assessment, Tax Exemption Status, School Board, Hospital, Employee. This responds to your letters of April 11 and April 17, 1996 in which you requested a confidential supplemental advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon members of a school board from voting on the tax exemption status for a hospital situated within the school district when some of those school board members are also employees of the hospital. Facts: As Solicitor for the School District, you request a supplemental Advice of Counsel as to Advice of Counsel 96 -509 issued on February 6, 1996. To answer your latest inquiry, it is necessary to review the facts from the initial inquiry. The facts as set forth in the prior advice are as follows: You represent a school district and request advice regarding a potential voting conflict of interest. Specifically, the County Board of Assessment has withdrawn the real estate tax exemption status from all hospitals located within the county. Litigation is presently pending to determine whether the hospital properties in whole or in part should be taxable or exempt. The School District has intervened in the litigation with regard to one hospital located within the school district. There are four directors on the School Board who are also employees of the subject hospital. All four members hold responsible positions at the hospital although they do very [sic] considerably as to administrative responsibility. It is your understanding that these positions are not involved in the "business" aspect of the hospital but rather in patient treatment and research. At least one of the directors is not strictly a hospital employee in that he performs services on a voluntary basis without compensation. Confidential Advice of Counsel 96 -509 -S May 20, 1996 Page 2 It is anticipated that issues may come before the School Board requiring formal action by vote of the directors. You seek guidance as to whether the affected directors must abstain from voting on such matters. You assert that no director in your view would use public office in violation of the Ethics Law and that no director has any direct personal or pecuniary interest in such votes. However, due to the potential significance of the issue, you believe that prudence requires an advisory. Confidential Advice 96 -509 at 1 -2 (Emphasis added). The analysis of your inquiry in Confidential Advice of Counsel 96 -509 included the following: In applying Section 3(a) of Act 9 of 1989 to the question you pose, those school directors, whose status at the hospital is that of employee within the definition of "business with which he is associated" would have a conflict so that they could not participate or vote as to the tax status of that hospital. If the one member who performs services on . v.I n i - •a• • i - • .• .I �•r • • r- officer, owner or financial interest holder), then that person would not have a conflict. For those directors who as hospital employees have a conflict, they must abstain as well as publicly state the reason for their abstention and file a written memo to that effect with the secretary taking the minutes as per Section 3(j) of Act 9 of 1989. Imo,, at 4 (Emphasis added). In your request for a supplemental advice, you have provided the following information. After noting that in the majority of school districts in Pennsylvania, the Board of School Directors is comprised of nine elected members, you state, "In accord with the said Advice of Counsel, four (4) of the nine (9) directors of the subject school board have been advised not to participate in voting and other confidential deliberations involving the tax assessment litigation with their employer" (Letter of April 11, 1996 at 1). You state that in recent weeks an additional, or fifth, member of the Board has "innocently engaged in several preliminary discussions regarding future employment with the same 'adverse' employer in litigation with the school district." 1th You have offered your opinion that this member has placed himself in a position whereby the Ethics Law would preclude his further participation in any future voting that may come before the Board regarding the litigation. As of the date of your letter, there was no pending decision for the Board to consider, but the litigation was scheduled for trial within fifteen days so that decisions could be faced and considered formally by the Board in that period. You state that it is your opinion that pursuant to Section 508 of the Public School Code, to conduct business, such matters would require no Tess than an affirmative vote of five Board members. You state that it is your understanding that Section 403(j) of the Ethics Law would permit those Board members previously Confidential Advice of Counsel 96 -509 -S May 20, 1996 Page 3 determined to be precluded from voting by virtue of a conflict under the Ethics Law to now participate in voting provided they disclose orally and in writing at the time of the vote the specific nature of their conflict. You nevertheless request an advisory from the Commission to confirm your understanding in this matter. Discussion: It is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Ethics Law, 65 P.S. §§407(10), (11), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 P.S. § §407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As Members of the School Board, the five directors on whose behalf you have inquired are public officials as that term is defined under the Ethics Law, and hence they are subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined in the Ethics Law as follows: Section 2. 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. "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 of his immediate family or a business with which he or a member of his immediate family is associated. "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. Section 3(j) of the Ethics Law provides as follows: Confidential Advice of Counsel 96 -509 -S May 20, 1996 Page 4 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 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. As you were previously advised, pursuant to Section 3(a) of Act 9 of 1989, those school directors who are employees of the hospital would have a conflict so that they could not participate or vote as to the tax status of the hospital. As for the member who performs services on a voluntary basis, it is not clear under the facts which you have submitted whether the member who provides such services is or is not an employee. That particular School Director would not have a conflict of interest unless the hospital is a "business with which he is associated ", i.e., unless he is an employee of the hospital, or a director, officer, owner or financial interest holder. The fifth member who now seeks employment with the hospital and has engaged in several preliminary discussions regarding future employment with the hospital, would have a conflict of interest if, based upon the facts, there is a reasonable and legitimate expectation of an employer - employee relationship developing. See, Snyder, Order 979 -2; Garner, Opinion 93 -004. As noted in the prior Advice, if the required abstentions result 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 participation is permissible provided the disclosure requirements noted above are followed. See, MIakar, Advice 91- 523 -S. Confidential Advice of Counsel 96 -509 -S May 20, 1996 Page 5 In this case, if there are five members of the School Board who are required to abstain as a result of conflicts under the Ethics Law, all five School Directors may vote as to the tax status of the hospital despite their conflicts if they otherwise abstain fully and if they satisfy the disclosure requirements of Section 3(j). On the other hand, if only four members of the Board have a conflict of interest under the Ethics Law, a majority will still be "attainable," and each member who has a conflict must abstain from participation and must satisfy the disclosure requirements of Section 3(j). 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 than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed herein is the applicability of the Public School Code. Conclusion: As members of a school board, the five school directors on whose behalf you have inquired are public officials subject to the provisions of the Ethics Law. Those of the school directors who are employees of a hospital would have a conflict and could not participate or vote on matters involving the tax status of that hospital. A school director who is seeking employment with the hospital and who has engaged in several preliminary discussions regarding future employment with the hospital, would also have a conflict of interest in matters involving the tax status of that hospital if, based upon the facts, there is a reasonable and legitimate expectation of an employer - employee relationship developing. A school director who performs services on a voluntary basis for the hospital will not have a conflict of interest unless the hospital is a "business with which he is associated," through his employment by the hospital or his status as a director, officer, owner, or financial interest holder. In each instance of a conflict of interest, a school board member with a conflict is required to abstain fully from any participation and is required to fully satisfy the requirements of Section 3(j) of the Ethics Law. If - and only if - five or more members of the nine member School Board have a conflict of interest under the Ethics Law, such that a majority is unattainable due to the abstentions from conflict under the Ethics Law, then those members may vote despite the conflict provided the members otherwise abstain fully and provided they satisfy the disclosure requirements of Section 3(j). Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. 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. 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. Confidential Advice of Counsel 96 -509 -S May 20, 1996 Page 6 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. r6it/ 'ncerely, Vincent J. opko Chief Counsel