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HomeMy WebLinkAbout168 KrushinskiMr. Joseph Krushinski President, Lakeland School District R. D. #1 Jermyn, PA 18433 Re: #82 -61 -C Dear Mr. Krushinski: are: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 ORDER OF THE COMMISSION December 28, 1982 Order No. 168 The State Ethics Commission has received a complaint regarding you and a possible violation of Act 170 of 1978. The Commission has now completed its investigation into these allegations and finds an appearance of a conflict with the public trust. The individual allegations and findings on which our conclusion is based I. Allegation: That as a School Director of Lakeland School District, you submitted and voted upon the bid submitted by Sugerman's Department Store for sports equipment to be sold to the district and voted to pay bills submitted by Sugerman's when you are employed as manager of Sugerman's and responsible for preparing and submitting bids for Sugerman's. These actions may violate Section 3(c), 3(a) or 1 of the Ethics Act. A. Findings: 1. You serve as a Director in the Lakeland School District hereinafter, the District and as such are a "public official" subject to the provisions of the Ethics Act. 2. You are employed as the manager of the sporting goods department for Sugerman's, a large retail discount store in Eynon, PA. a. You are compensated as a manager at Sugerman's on a salary plus bonus basis, although the "bonus" is not necessarily dependent upon your work level or job performance with relation to sales of the sporting goods department. Joseph Krushinski December 28, 1982 Page 2 b. Neither you nor any member of your immediate family is an owner, director, officer or holder of stock in Sugerman's exceeding 5% of the equity at fair market value of the business. c. As part of your job as manager you prepare and submit bids on behalf of Sugerman's to various entities, including the District. 3. The District has a policy of requesting bids on an annual basis for filling the District's needs in the area of athletic supplies. a. This annual bidding process is open to any supplier and no "preferred bidder" process is used. b. After sealed bids are received, the District's business manager reviews the bids, including a review of three past years'experience with the suppliers, the quality of their products, the service they provide, etc. and the manager then makes a recommendation to the Board as to which supplier should receive the award. c. The School Board then decides to accept or reject the manager's recommendation and chooses the supplier for the District's athletic supplies and equipment needs. d. During the year -long contract period the District then "draws" from the bid, up to the limits of the bid, at different occasions during the school year, as needs arise. e. Within the bid- contract price the various charges for individual items or units were predetermined or specified in the contract. 4. Since January 1, 1979, Sugerman's has received the award of the contract to be one of the the District's athletic suppliers, as a result of the bid process described above. a. You participated in the preparation of the bids Sugerman's submitted to the District. b. There is no evidence that you possessed or utilized confidential information in the preparation of Sugerman's bids to the District. Joseph Krushinski December 28, 1982 Page 3 c. You typically voted as a Director to approve or accept Sugerman's bids, as reviewed and recommended by the manager, to become the District's annual supplier and in particular, you voted affirmatively at the August 25, 1982 meeting of the Board to accept Sugerman's bid as the low bid. 5. During the school year, the District "charges" various items, as needed, against the annual contract for supplies. a. Such purchases were undertaken at the discretion of the athletic department personnel as approved by the business manager, but were not pre- approved by the Board. b. Purchases made for such items are presented for payment to the Board at the Board's meetings. c. All District bills are typically presented for approval as a list and individual bills are not reviewed or approved separately. d. When Sugerman's bills are included in this monthly approval process, you typically have not abstained. B. Discussion: As a public official, your conduct is subject to the to the requirements of the Ethics Act. We will discuss the various requirements of the Ethics.Act applicable to this situation. First, we observe the requirements of Section 3(c) of the Ethics Act which states: 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). Joseph Krushinski December 28, 1982 Page 4 This provision requires an open and public process to be observed where any business in which you or a member of your immediate family serve as director, officer, owner or holder of stock exceeding 5% of equity, contracts with the District. Section 3(c) would not truly be applicable to this situation given that you do not stand in such a relationship to Sugerman's. In any event, the basic contract in question here was subject to an open and public bid process so the requirements of Section 3(c) would be met even if such a relationship existed between you or your immediate family and Sugerman's. Second, we review the requirements of Section 3(a) of the Ethics Act, particularly in light of the directive in Section 1 of the Ethics Act that a public official must avoid the appearance of a conflict between his financial interests and the public trust. See 65 P.S. 401 and Section 3(a) which requires that: 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). In prior decisions of the State Ethics Commission, officials have been required to abstain from voting to award contracts or other settlements to their employers in order to comply with these provisions of the Ethics Act. See Knox, 81 -009 and Boyle, 80 -020. Thus, in order to avoid an appearance of a conflict between your financial interests and the public trust, you should have abstained from participating in the Board's decision - making process leading to and including voting to award the annual contract to your employer, Sugerman's. Section 3(a) cited above is not specifically violated here, however, because there was no evidence of a direct financial benefit which you secured as a result of the award of the contract to Sugerman's. In relation to your participation in Board decisions to pay bills submitted by Sugerman's after the annual contract had been awarded our analysis is more difficu tom. The Commission has held that if payment of bills submitted by an official's employer amounts to concurrence in payment of a pre - fixed, undisputed amount, the official - employee may vote to pay the employer's bill as presented. See Stewart, 79 -070. If, however, the payment to one's employer would be subject to the discretion of the official - employee or otherwise subject to question, dispute or adjustment, the official should similarly abstain from participating, including voting, in the Board's decision to pay the amount in question. See Reid, 82 -520. amd Sheehan, 82 -556. Joseph Krushinski December 28, 1982 Page 5 In the present case, if the Board has discretion as to the amount to be paid to Sugerman's and the price of a particular item purchased within the general contract price is not pre -set within the contract -bid price, then discretion is vested with the Board as to the payment. You may not participate in the exercise of the Board's discretionary payments to Sugerman's in such a circumstance without giving rise to an appearance of a conflict with the public trust. If the bills submitted are pre- ordained or pre -set by the general contract and if the Board does not decide in advance to purchase a particular item, the payment of a bill would be considered routine and not subject to your or the Board's discretion. You could participate in such a decision of the Board. If the Board does act to approve a particular purchase prior to the purchase, you should abstain similarly as in the situation where the price has not been pre - determined by the annual bid - contract. Given our findings above that the prices in question were pre -set by the contract and that the Board typically exercised no pre- determination or discretion as to the actual purchase of particular items, your participation in the Board's payment of bills as submitted is appropriate and does not contravene the requirements of the Ethics Act. C. Conclusion: In order to avoid an appearance of a conflict with the public trust, you should not have voted or otherwise participated in the Board's decision to select your employer, Sugerman's, as the annual supplier to the District. Nor should you do so in the future. Section 3(a) of the Ethics Act has not been violated under the circumstances presented here because there is no evidence of a direct, personal financial gain which you secured as a result of your votes to award the contract to your employer, Sugerman's. However, you should participate in the Board decisions to pay bills presented by Sugerman's as supplier to the District only where the bills are routine, not subject to dispute, adjustment, and relate to items for which the bid - contract have pre -set prices. You should not participate in Board decisions, including voting, where the Board might pre- approve a particular purchase from the annual contract with Sugerman's regardless of whether the particular items to be purchased have a pre -set contract price. Under the circumstances present here, your participation in the Board's decision to pay bills presented by Sugerman's, given the lack of discretion and the pre -set prices in the contract with Sugerman's does not contravene any requirements of the Ethics Act. Joseph Krushinski December 28, 1982 Page 6 Your future conduct in relation to the award of the annual contract, however, should conform to the standards set forth above and your conduct in relation to the Board's decisions as to the payment of bills to your employer, Sugerman's, should continue to be consistent with the standards set forth above. Finally, there is no violation of Section 3(c) of the Ethics Act present in this situation. Our files in this case will remain confidential in accordance with Section 8(a) of the Ethics Act, 65 P.S. 408(a). However, this Order is final and will become available as a public document within 15 days after service unless you file documentation with the Commission which justifies reconsideration and /or challenges pertinent factual findings. See 51 Pa. Code 2.38. During this 15 -day period, no one, including the Respondent unless he waives his right to challenge this Order, may violate this confidentiality by releasing, discussing or circulating this Order. Any person who violates the confidentiality of a Commission proceeding is guilty of a misdemeanor and shall be fined not more than $1000 or imprisoned for not more than one year or both, see 65 P.S. 409(e). PJS /jc Sincerely, —Paul J. /Snith Chairma