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HomeMy WebLinkAbout96-537 StahlJoyce M. Stahl Manager /Secretary Borough of Milton 1 & 2 Filbert Street PO Box 150 Milton, PA 17847 -0150 Dear Ms. Stahl: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL April 9, 1996 96 -537 Re: Conflict, Public Official /Employee, Borough Manager /Secretary, Trustee and Director for PA State Association of Boroughs, Municipal Retirement Trust Fund, Pension Plans. This responds to your letter of March 8, 1996 in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a borough manager /secretary who also serves on the Board of Trustees and Board of Directors of the Pennsylvania State Association of Boroughs regarding the administration of the borough's pension plans. Facts: As the Manager /Secretary for the Borough of Milton, you request an advisory from the State Ethics Commission. In addition to your aforesaid public position, you also serve on the Board of Trustees and the Board of Directors of the Pennsylvania State Association of Boroughs (PSAB). The Board of Trustees has discretionary authority and control over the investment and custody of the assets of the trust fund and manages and administers trust benefits. Each trustee is considered a fiduciary and is held to the highest standard of conduct. The Borough of Milton is exploring the possibility of transferring its pension plans to PSAB. You ask whether this would constitute a conflict of interest for you. You state that as a Member of the Board of Trustees and Board of Directors of PSAB, you receive no pay but you do receive reimbursement for certain expenses. 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 Stahl, 96 -537 April 9, 1996 Page 2 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 Manager /Secretary for the Borough of Milton, you are a public official /public employee as defined under the Ethics Law, and hence you 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. "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." 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. "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. Stahl, 96 -537 April 9, 1996 Page 3 In addition, Sections 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 anything of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 3(f) of the Ethics Law provides as follows: 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. Parenthetically, where contracting is otherwise allowed or where there appears to be no express prohibitions to such contracting, the above particular provision of the law would require that an open and public process must be used in all situations where a public official /employee is otherwise appropriately contracting with his own governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more. This open and public process would require that the following be observed as to the contract with the governmental body: (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. Section 3(f) of the Ethics Law also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Stahl, 96 -537 April 9, 1996 Page 4 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 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. In applying the above provisions of the Ethics Law to the circumstances which you have submitted, pursuant to Section 3(a) of the Ethics Law, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The PSAB is an association with a membership that is not restricted to public officials /public employees. In this regard it is distinguished from the Borough Councilmen's Association of Pennsylvania. See, Edwards, Opinion No. 91 -003. Thus, the PSAB is a "business" as that term is defined in the Ethics Law. Furthermore, given Stahl,, 96 -537 April 9, 1996 Page 5 that you serve on the PSAB's Board of Trustees and Board of Directors, it is a business with which you are associated. As for any fiduciary duty which you may owe to PSAB, you are advised that the Ethics Law requires of public officials /public employees that the public trust -- rather than the interests of private business -- be paramount. Crisci, Opinion No. 89 -013. To the extent that the prospective transfer of the Borough's pension plans to PSAB would result in a private pecuniary benefit to PSAB, a business with which you are associated, you would clearly have a conflict of interest as to such matters in your public position with the Borough. In each instance of a conflict of interest, you would be required to abstain from any participation and to publicly announce your abstention and the reasons for same, both orally at the public meeting and also in a memorandum to be filed with the Borough Council. Furthermore, to the extent the proposed transfer would result in PSAB contracting with the Borough, the restrictions of Section 3(f) would have to be fully satisfied in order for such a transaction to meet the requirements of the Ethics Law. Those restrictions are as set forth above. Additionally, should PSAB be chosen to handle the Borough's pension plans through such a contractual arrangement, you, in your public capacity with the Borough, could not have any supervisory or overall responsibility as to same. 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 Borough Code. Conclusion: As Manager /Secretary for the Borough of Milton, you are a public official /public employee subject to the provisions of the Ethics Law. The Pennsylvania State Association of Boroughs (PSAB) is a business with which you are associated in your capacities as a member of its Board of Trustees and Board of Directors. In your public capacity with the Borough, you would have a conflict of interest as to the prospective transfer of the Borough's pension plans to PSAB. In each instance of a conflict of interest, you would be required to abstain from participation and to publicly announce your abstention and the reasons for same both orally at the public meeting and in a written memorandum to be filed with Borough Council. To the extent that the proposed transfer of pension plans to PSAB would involve contracting between the Borough and PSAB, a business with which you are associated, the restrictions of Section 3(f) as set forth above would have to be fully satisfied. 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. Stahl, 96 -537 April 9, 1996 Page 6 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 forma/ Opinion will be issued by the Commission. 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. erely, Vincent opko Chief Counsel