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HomeMy WebLinkAbout02-589 FenderDr. James Fender, School Director Wyoming Valley West School Board 42 East State Street Larksville, PA 18704 ADVICE OF COUNSEL August 19, 2002 02 -589 Re: Conflict; Public Official /Employee; School Director; School District; Private Employment or Business; Business With Which Associated; Consulting Contract Between Private Employer and School District. Dear Dr. Fender: This responds to your faxed letter received on July 18, 2002, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.GS. § 1101 et seq., presents any prohibition or restrictions upon a school director with regard to: (1) maintaining his position as a school director while being employed by a consulting corporation that performs consulting work for the school district; (2) performing work under such contract; or (3) receiving compensation for such work under his usual salary. Facts: As a School Director for the Wyoming Valley West School District ( "School iLSSfrict "), you seek an advisory from the State Ethics Commission as to the following. First, you ask whether you may maintain your position as a School Director while being employed by a consulting corporation that performs consulting work for the School District. Assuming the above is permitted, you further inquire as to whether you may perform work under the aforesaid consulting contract and receive compensation for such work under your usual salary. Discussion: It is initially noted that pursuant to Sections 1107(10) and 110701) of the Ethics Act, 65 Pa.C.S. §§ 1107(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 Fender 02 -589 August 19, 2002 Page 2 facts relevant to the inquiry. 65 Pa.C.S. § 1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct which has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. As a School Director for the School District, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide as follows: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict. - -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. 65 Pa.C.S. §§ 1103(a), (j). The following terms that pertain to conflicts of interest under the Ethics Act are defined as follows: § 1102. 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 Fender 02 -589 August 19, 2002 Page 3 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. The term 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. 65 Pa.C.S. § 1102. It is noted that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the ublic official /public employee may not use the authority of his public position - or confidential information obtained by being in that position - for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmenelephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. If a business with which the public official /public employee is associated or its client(s) would have matter(s) pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter(s). Miller, Opinion No. 89 -024; see also, Kannebecker, Opinion 92 -010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /pub i4 c employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 11030) set forth above. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In the event that the required abstention would 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 Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. Fender 02 -589 August 19, 2002 Page 4 Section 1103(f) of the Ethics Act, which pertains to contracting /subcontracting, provides as follows: §1103. Restricted activities (f) Contract. - -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. 65 Pa.C.S. §1103(f). The following terms pertaining to Section 1103(f) are defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal 1py the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body or other establishment in the executive, legislative or judicial branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. Fender 02 -589 August 19, 2002 Page 5 Section 1103(f) of the Ethics Act does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the 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, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (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 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Having set forth the above provisions of the Ethics Act that pertain to your inquiry, it is noted that the State Ethics Commission, in the exercise of its jurisdiction, is limited to making determinations under the Ethics Act. It is beyond the scope of the Ethics Act and the function of the State Ethics Commission to make determinations as to other state laws, regulations or Constitutions. However, in issuing advisories under the Ethics Act, it is necessary at times to review other laws to determine whether a given benefit would be authorized, so that it may be determined whether a public official /public employee would be receiving a private pecuniary benefit contrary to the Ethics Act. In the instant matter, it is administratively noted that the Public School Code of 1949 as amended ( "Public School Code "), provides in pertinent part: § 3 -324. Not to be employed by or do business with district; exceptions (a) No school director shall, during the term for which he was elected or appointed, as a private person engaged 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: Provided, That one who has served as a school director for two consecutive terms, of six years each, may be elected to the position of attorney or solicitor for the board of which he was a member by the unanimous vote of all the other members of the board, and, after resigning his office as school director, shall be entitled to receive such pay for his services as solicitor as the board of school directors may determine: Provided, however, That a school director may be appointed to the position of secretary to the board of a school district of the second class, of which he was a member during the term for which he was elected or appointed upon the unanimous consent of all the other members of the board after resigning his office as school director, and he shall be entitled to receive such pay for his services as secretary as the board of school directors shall determine: And provided further, That one who has served as a Fender 02 -589 August 19, 2002 Page 6 school director may, after resigning from office as a school director, be elected to the position of teacher by the board of which he was a member by a vote of at least two - thirds of all other members of the board and shall be entitled to receive such pay for his services as a teacher as the board of school directors may lawfully determine. (c) It shall not be a violation of this section for a school district to contract for the purchase of goods or services from a business with which a school director is associated to the extent permitted by and in compliance with 65 Pa.C.S. Ch. 11 (relating to ethics standards and financial disclosure). 24 P.S. §§ 3- 324(a), (c). Subparagraph (c) of Section 3 -324 was added to the Public School Code by Act 35 of 2001. On its face, subparagraph (c) clearly permits a school district to contract for the purchase of goods or services from a business with which a school director is associated as long as the restrictions and requirements of the Ethics Act are observed. In applying Sections 1103(a) and 1103(j) of the Ethics Act to your first question, you are advised that the Ethics Act would not prohibit you from maintaining your position as a School Director while being employed by a consulting corporation that performs consulting work for the School District. However, the consulting corporation would be a business with which you, as an employee, would be considered to be associated. Therefore, in your public capacity as a School Director, you would have a conflict of interest in matters such as the consulting contract that would financially impact you or your private employer. See, Miller, supra; Kannebecker, supra. As noted above, in each instance of a conflict, you wed be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Turning to your second question, as to whether you could perform work under the aforesaid consulting contract between the School District and your private employer, you are advised that the Ethics Act would not apply to restrict you from performing such work which would be done in your private capacity. However, to the extent the contract would be valued at $500 or more, Section 1103(f) would apply and would prohibit you in your capacity as a public official from having any supervisory or overall responsibility for the implementation or administration of the contract. Turning to your third question, as to whether you could receive compensation for such work under your usual salary, you are advised that the answer to that question would appear to hinge upon a proper interpretation of subparagraph (a) of Section 3 -324 of the Public School Code. Therefore, in responding to your third question, this Advice must necessarily be limited to stating that to the extent your receipt of such compensation would be permitted by the Public School Code, it would likewise be permitted under the Ethics Act, and to the extent your receipt of such compensation would be prohibited by the Public School Code, it would likewise be prohibited by the Ethics Act. This Advice is limited to addressing the applicability of Sections 1103(a), 1103(f) and 1103(j) of the Ethics Act. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /public employee and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public 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. Fender 02 -589 August 19, 2002 Page 7 Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Conclusion: As a School Director for the Wyoming Valley West School District ( "School District"), are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. 1101 et seq. The Ethics Act would not prohibit you from maintaining your position as a School Director while being employed by a consulting corporation that performs consulting work for the School District. As a School Director, you would have a conflict of interest in matters such as the consulting contract that would financially impact you or your private employer. In each instance of a conflict, you would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The Ethics Act would not apply to restrict you from performing work under the consulting contract in your private capacity. To the extent the consulting contract between the School District and your private employer would be valued at $500 or more, Section 1103(f) of the Ethics Act would apply and would prohibit you in your capacity as a public official from having any supervisory or overall responsibility for the implementation or administration of the contract. To the extent the Public School Code of 1949 as amended ( "Public School Code ") would permit you to receive compensation for such work under your usual salary, your receipt of such compensation would likewise be permitted under the Ethics Act; to the extent your receipt of such compensation would be prohibited by the Public School Code, it would likewise be prohibited by the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an 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, provided 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. 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. Sincerely, Vincent J. Dopko Chief Counsel