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Home My WebLink About22-002 Deery PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 OPINION OF THE COMMISSION Before: Nicholas A. Colafella, Chair Mark R. Corrigan, Vice Chair Roger Nick Melanie DePalma Michael A. Schwartz Shelley Y. Simms Rhonda Hill Wilson DATE DECIDED: 3/02/22 DATE MAILED: 3/02/22 22-002 Mr. Michael Deery Chief Counsel Office of State Senator Vincent Hughes Dear Mr. Deery: This responds to your correspondence of February 2, 2022, by which you requested an advisory opinion from this Commission. I. ISSUE: Whether student loans forgiven through the Public Service Loan Forgiveness (PSLF) Program are reportable as a direct or indirect source of income for purposes of 65 Pa.C.S. §1105(b)(5) when the amount forgiven is in excess of the aggregated threshold of $1,300.00? II. FACTUAL BASIS FOR DETERMINATION: The facts submitted in support of the request for an advisory opinion can be summarized as follows: Deery, 22-002 March 2, 2022 Page 2 You (Mr. Michael Deery) are an attorney licensed to practice law in the Commonwealth of Pennsylvania and currently serve as Chief Counsel for State Senator Vincent Hughes. You have noted that staff attorneys who represent governmental bodies are generally considered to be a public employee according to the examples appearing in the Regulations promulgated by the Commission. \[See 51 Pa. Code Section 11.1 (iv)(C)\]. You seek an advisory opinion regarding the issue of whether or not student loans forgiven through the Public Service Loan Forgiveness (PSLF) Program are reportable, as required by the Public Official and Employee Ethics Act, specifically 65 Pa.C.S. §1105(b), as a direct or indirect source of income for purposes of Block 10 on the Statement of Financial Interest form? You further provide that the amount forgiven is in excess of the aggregated threshold of $1,300 under Section 1105(b)(5). In September 2021 you fulfilled the requirements set by the Federal Government to qualify for forgiveness through the PSLF. You have stated that to qualify for PSLF an individual must be employed by a federal, state, local or tribal government or not-for-profit organization; work full- time; have direct loans; repay outstanding student loans under an income-driven repayment plan; and make 120 qualifying payments. In August 2021, you completed the last of the required 120 payments and submitted for forgiveness through MyFedLoan, the servicer for the U.S. Department of Education for the PSLF program. In September 2021 you were notified by the U.S. Department of Education that your application for forgiveness was approved and your loans were forgiven through the program. By letter dated February 10, 2022, you were notified of the date, time and location of the public meeting at which your request would be considered. III. DISCUSSION: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), Opinions are issued to the requester based upon the facts that the requester has submitted. In issuing a ruling based upon the facts that the requester has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An Opinion only affords a defense to the extent the requester has truthfully disclosed all material facts. As Chief Counsel for State Senator Vincent Hughes, you are a public employee as that term is defined by the Ethics Act. See P.J.S. v. Pa. State Ethics Commn, 723 A.2d 174 (1999); 51 Pa.Code §11.1 et seq. As a public employeeyou are subject to the provisions of the Ethics Act, including the requirements for filing Statements of Financial Interests. Section 1104(a) of the Ethics Act provides: (a) Public official or public employee.--Each public official of the Commonwealth shall file a statement of financial interests for the preceding calendar year with the commission no later than May 1 of Deery, 22-002 March 2, 2022 Page 3 each year that he holds such a position and of the year after he leaves such a position. Each public employee and public official of the Commonwealth shall file a statement of financial interests for the preceding calendar year with the department, agency, body or bureau in which he is employed or to which he is appointed or elected no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. Any other public employee or public official shall file a statement of financial interests with the governing authority of the political subdivision by which he is employed or within which he is appointed or elected no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. Persons who are full-time or part-time solicitors for political subdivisions are required to file under this section. 65 Pa.C.S.§1104(a). Section 1105 of the Ethics Act, which sets forth the substantive disclosure requirements for Statements of Financial Interests, provides in part as follows: (b) Required information.--The statement shall include the following information for the prior calendar year with regard to the person required to file the statement: *** (5) The name and address of any direct or indirect source of income totaling in the aggregate $1,300 or more. However, this provision shall not be construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics or common law privileges. 65 Pa.C.S. §1105(b)(5). The term income is defined in the Ethics Act as follows: Income. Any money or thing of value received or to be received as a claim on future services or in recognition of services rendered in the past, whether in the form of a payment, fee, salary, expense, allowance, forbearance, forgiveness, interest, dividend, royalty, rent, capital gain, reward, severance payment, proceeds from the sale of a financial interest in a corporation, professional corporation, partnership or other entity resulting from termination or withdrawal therefrom upon assumption of public office or employment or any other form of recompense or any combination thereof. The term refers to gross income and includes prize winnings and tax-exempt income. The term does not include gifts, governmentally mandated payments or benefits, retirement, pension or annuity payments funded Deery, 22-002 March 2, 2022 Page 4 totally by contributions of the public official or employee, or miscellaneous, incidental income of minor dependent children. 65 Pa.C.S. §1102. It is initially noted that in promulgating the Ethics Act, the General Assembly declared that the Ethics Act is to be liberally construed to promote complete financial disclosure in accordance with the requirements of the Ethics Act. 65 Pa.C.S. § 1101.1. A straightforward application of the above provisions establishes that reportable direct or indirect sources of income totaling in the aggregate $1,300 or more must be included on the Statement of Financial Interests form prescribed by this Commission. However, the Ethics Act specifically excludes from the definition of income and consequently from the related disclosure requirements at Section 1105(b)(5) of the Ethics Act governmentally mandated payments or benefits 65 Pa.C.S. §1102. In keeping within the stated purpose of the Ethics Act, namely, that the people have a right to be assured that the financial interests of holders of or nominees or candidates for public office do not conflict with the public trust,(65 Pa.C.S. §1101.1) the definition of income should be applied broadly, whereas income which is deemed a governmentally mandated payment should be construed narrowly. Generally, income and items such as workers compensation/ unemployment compensation benefits, public assistance, etc., have been deemed governmentally mandated payments, which giv\[es\] full effect to both sections of the applicable statutory section.In re Benninghoff, 852 A.2d 1182, 1186 (2004). In as much as the Public Service Loan Forgiveness Program is a creation of the Federal Government (see 34 CFR § 685.219), it is the holding of this Commission that student loans forgiven upon compliance of the terms and conditions of the PSLF Program, equates to a governmentally mandated payment and as such are not required to be reported upon Statement of Financial Interests filed pursuant 65 Pa.C.S. §1104. It is further the opinion of this Commission that by holding loan forgiveness through the PSLF Program is not reportable as income the stated Purpose of the Ethics Act is upheld and does not otherwise undermine the faith and confidence of the people with their elected and/or appointed public officials and public employees. The finding of this Commission only extends to those student loans forgiven through the Public Service Loan Forgiveness Program and does not extend to other loans, including student loans, otherwise forgiven by a lender or through any other means. IV. CONCLUSION: term is defined by the Ethics Act. As subject to the provisions of the Ethics Act, including the requirements for filing Statements of Financial Interests. Deery, 22-002 March 2, 2022 Page 5 In as much as the Public Service Loan Forgiveness (PSLF) Program is a creation of the Federal Government, it is the holding of this Commission that student loans forgiven upon compliance of the terms and conditions of the PSLF Program equate to a governmentally mandated payment and as such are not required to be reported upon Statement of Financial Interests filed pursuant 65 Pa.C.S. §1104. The finding of this Commission only extends to those student loans forgiven through the Public Service Loan Forgiveness Program and does not extend to other loans, including student loans, otherwise forgiven by a lender or through any other means. The propriety of the proposed course of conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(10) of the Ethics Act, 65 Pa.C.S. § 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. By the Commission, Nicholas A. Colafella Chair