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HomeMy WebLinkAbout80-043 McQuaideDelbert J. McQuaide 811 University Drive State College, PA 16801 Dear Mr. McQuaide: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 August 20, 1980 OPINION OF THE COMMISSION 80 -043 In your letter of April 1, 1980 you requested an opinion as to the applicability of Act 170 to the members of the Board of Trustees and to the employees of the Pennsylvania State University (hereinafter Penn State or the University). Your letter identified Penn State as an institution of higher education established by a special act of the Legislature (24 P.S. 2531 et seq). Modifi- cations to the corporation occurred as a result of the Corporation Law of 1874 Act of April 29, 1874 P.L. 73) and the Nonprofit Corporation Law of 1933 (Act of May 5, 1933 P.L. 287). Today, the basic governing authority of the University consists of a Board of Trustees composed of 32 members, 10 of whom are appointed by the Governor of the Commonwealth. Of these 10 Board members, six (6) are appointed by the Governor subject to confirmation by the Senate and four (4) are ex officio members (the Governor himself, the Secretaries of Education, Agri- culture and Environmental Resources). This Board is responsible for the operations of Penn State. They retain the power to independently dispose of property, make other decisions regarding the conduct of operations at the University and may even amend the basic charter under which the school operates, subject only to the provisions of the Nonprofit Corporation Law (Act of May 5, 1933, P.L. 287, 15 P.S. 7701- 7707). As you state in your request, the Ethics Act covers "public employees" and "public officials" as those terms are defined in the Act. These definitions appear below: Delbert J. McQuaide August 20 , 1980 Page 2 Public Employee: "Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a nonministerial nature with regard to: (1) contracting or procurement; (21 administering or monitoring grants or subsidies; (3) planning or zoning; (4). inspecting, licensing, regulating or auditing any person; or (5) any other activity where the official action has an economic impact of a greater than a de minimus nature on the interests of any person. "Public employee" shall not include individuals who are employed by the State or any political subdivision thereof in teaching as distinguished from administrative duties." Public Official: "Any elected or appointed official in the executive, legislative or judicial branch of the government of the Commonwealth or any of its political subdivisions. The question, as before, is whether these terms include the Board of Trustees and /or employees of Penn State. The Commission recognizes that the Ethics Act is, of course, to be liberally construed. Sec. 1, 65 P.S. 401. Likewise, the relationship of Penn State in name and in fact, to the Commonwealth of Pennsylvania is a close and important one. Indeed, if one were to list those factors which would sup- port the conclusion that Penn State is covered by the Ethics Act and those which mitigate against inclusion, these "lists" might well be virtually equal. However, on the whole, the Commission concludes that these factors when reviewed and the Ethics Act itself in its definitions compel the conclusion that the Legislature did not expressly provide that Penn State be included within the coverage of the Ethics Act. The Commission, accordingly, must conclude that the Ethics Act does not apply to the Board of Trustees or employees of Penn State. Discussion follows. Delbert J. McQuaide August 20, 1980 Page 3 First and foremost, the Ethics Act applies only to "individuals employed by the Commonwelath or a political subdivision" or to an "elected or appointed official in the Executive, Legislative or Judicial Branch of the State or any political subdivision." Penn State is nominally only a "state- related," as opposed to a state owned, institution. See 24 P.S. 5009. Thus, it is not the "Commonwealth" by virtue of state ownership. A state - related university similar to Penn State, Temple University, has been held not even to constitute an "agency" of the Commonwealth for purposes of the Inspection and Copying Records Act. See Mooney v. Temple University, 448 Pa. 424 292 A.2d 395 (1972). Penn State itself has, likewise, been held not an agency of the Commonwealth within the meaning of the Appellate Court Jurisdiction Act. See Brush v. Penn State Universtity Board of Trustees, 249 Pa. Superior 164, 375 A.2d 810 (1977). Thus, weight must be given to the conclusion that Penn State is obviously not the Commonwealth or even typically described or considered an "agency" of the Commonwealth. Penn State is not the Commonwealth or an agency of the Commonwealth and its Trustees and employees are therefore not "public employees" under the Ethics Act. Similarly, the Administrative Code (Act of April 9, 1929, P.L. 177, 71 P.S. 61 et seq) does not list Penn State as "in" the Executive Branch of the Common- wealth. It is clearly not within the Legislative or Judicial Branch. The Commission's regulations which define "political subdivision" as any "county, city, borough, incorporated town, township, school district, vocational school, county institutional district and any governmental body organized by the aforementioned governmental bodies" support the conclusion that Penn States Trustees are not "public officials." Penn State is not a "governmental body" organized by any of the "political subdivisions" mentioned in 51 Pa. Code Chapter 2. Delbert J. McQuaide August 20, 1980 Page 4 Finally and perhaps most importantly, the opera- tions of Penn State, although supported to a large extent by public funds, are not controlled by persons elected by the public or appointed by public officials. Indeed, as noted above, the Trustees appointed by a public official, the Governor, or who serve ex officio do not even constitute a majority of the Board member- ship. Thus, the Board is not primarily composed of or responsible to appointed or elected public officials. There is neither Executive or Legislative Branch control, input or direction to the Board of Trustees as to the operation or activities of the University. The budgetary appropriations made to Penn State are considered "non- preferred," ie. they require a two - third vote of the Legislature and are made only after the basic budget is enacted and funded. While this budgetary grant is significant, its size is by no means determinative of the issues raised here. See Benner v. Oswald, 444 F. Supp. 545 (M.D. Pa. 1978), affirmed, 592 F.2d 174 (3rd Cir. 1979) for a general synopsis of this budget from 1971 - 1974 and factors describing the relationship of Penn State to the Commonwealth in general. The Commission recognizes the countervailing factors which link Penn State to the Commonwealth. For example, Penn State is a "public employer" under the Public Employee Relations Act, Act of July 23, 1970, P.L. 563, 43 P.S. 110.101 et seq. and its employees may participate in the state employees retirement system. Likewise the University has been held to be exempt from the gasoline, inheritance and capital stock taxes; Opinion of the Attorney General, issued December 12, 1921. However, given the factors first listed above, the definitions in the Ethics Act and under these factual and legal circumstances, the Commission cannot conclude that the Legislature contemplated that the Board of Trustess and the employees of Penn State are within the purview of the specific definitions of "public employee" and "public official" in the Ethics Act. Delbert J. McQuaide August 20, 1980 Page 5 Conclusion: Members of the Board of Trustees and its employees are not covered by the Ethics Act. Of course, if Trustees or employees of Penn State would be other- wise required to comply with the provisions of the Act (such as by virtue of holding office as Secretary of Education, for example), this opinion has no effect of discharging such compliance. Pursuant to Section 7(9)(i), this opinion is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any 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. PJS /rdp cc: Murray Dickman Bill Kennedy Thomas Bergen, Esquire Bill Cluck Tom Boyer AUL SMITH C hairmn