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HomeMy WebLinkAbout03-001 ConfidentialI. ISSUE: OPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Frank M. Brown Susan Mosites Bicket Donald M. McCurdy Michael J. Healey DATE DECIDED: April 4, 2003 DATE MAILED: April 18, 2003 03 -001 Re: Public Official /Public Employee; Township Manager; FIS; Gifts; Paid Travel Expenses; Prospective Employers. This Opinion is issued in response to your January 4, 2003, request for a confidential advisory. Whether, pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., a public official /public employee is required to disclose on his Statements of Financial Interests travel expenses he receives from prospective employers in connection with employment interviews. II. FACTUAL BASIS FOR DETERMINATION: As the Township Manager for Township A, you request a confidential advisory from this Commission regarding the requirements for filing Statements of Financial Interests under the Ethics Act. You have submitted information outlining your duties as Township Manager. You have also submitted facts that may be fairly summarized as follows. In 2002, you interviewed for employment with Entity B, Out -of -State County C, and Out -of -State Village D. You state that these employment interviews were conducted in your private capacity on your own time and were not in connection with your current responsibilities as Township Manager. You received partial reimbursement of your travel expenses from each of the above entities /bodies as follows: [dollar amount] from Entity B; [dollar amount] from Out - of -State County C; and [dollar amount] from Out -of -State Village D. In each case, the reimbursements were partial and varied as to mileage, airfare, meals, and rental car. You contend that in each case, the interview travel was in exchange for and consideration of your arranging your own travel arrangements, financing the travel expenses, Confidential Opinion 03 -001 April 18, 2003 Page 2 and using your free time to accommodate the associated travel and interview. You state that in each case, you agreed to and assumed, as part of the arrangement to be interviewed, part of the travel related expenses. You further state that each of the applications and interviews occurred under the condition that both the application and interview would be confidential. Based upon the above, you ask whether you must report the aforesaid partial reimbursements of your employment interview travel expenses as gifts under Item 11 on your Statement of Financial Interests Form for calendar year 2002. By letter dated March 11, 2003, you were notified of the date, time and location of the executive 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), 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, this 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 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. As the Township Manager for Township A, you are a public official /public employee subject to the provisions of the Ethics Act (see, Complainant A, Order 1254; Anthony, Order 1179; Feller, Order 576 -R), including the requirements for filing Statements of Financial Interests: § 1104. Statement of financial interests required to be filed (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 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: § 1105. Statement of financial interests Confidential Opinion 03 -001 April 18, 2003 Page 3 (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. (6) The name and address of the source and the amount of any gift or gifts valued in the aggregate at $250 or more and the circumstances of each gift. This paragraph shall not apply to a gift or gifts received from a spouse, parent, parent by marriage, sibling, child, grandchild, other family member or friend when the circumstances make it clear that the motivation for the action was a personal or family relationship. However, for the purposes of this paragraph, the term "friend" shall not include a registered lobbyist or an employee of a registered lobbyist. (7) The name and address of the source and the amount of any payment for or reimbursement of actual expenses for transportation and lodging or hospitality received in connection with public office or employment where such actual expenses for transportation and lodging or hospitality exceed $650 in the course of a single occurrence. This paragraph shall not apply to expenses reimbursed by a governmental body or to expenses reimbursed by an organization or association of public officials or employees of political subdivisions which the public official or employee serves in an official capacity. 65 Pa.C.S. §§ 1105(b)(5) -(7). The following terms pertaining to financial disclosure under the Ethics Act are defined as follows: § 1102. Definitions "Gift." Anything which is received without consideration of equal or greater value. The term shall not include a political contribution otherwise reported as required by law or a commercially reasonable loan make in the ordinary course of business. "Income." Any money or thing of value received or to be Confidential Opinion 03 -001 April 18, 2003 Page 4 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 totally by contributions of the public official or employee, or miscellaneous, incidental income of minor dependent children. 65 Pa.C.S. § 1102. In applying the above provisions of the Ethics Act to the facts and question that you have submitted, the fundamental first issue to be addressed is whether the payments by Entity B, Out -of -State County C, and Out -of -State Village D for a portion of your travel expenses incurred in seeking employment with these entities /bodies constituted some form of economic benefit to you. We determine that for purposes of the Ethics Act, the payment by a prospective employer of all or a portion of a prospective employee's travel expenses incurred in attending an employment interview would constitute an economic benefit to the p rospective employee. Absent such a payment, the prospective employee would be forced to either bear the full burden of such travel expenses or forego the employment opportunity. In other contexts, this Commission has held that the avoidance /reduction of out-of-pocket expenses is a financial benefit. See, e.q., Harper, Opinion 94 -001; Brooks, Order 1049; Freind, Order 800. Thus, we determine that the payments by Entity B, Out -of -State County C, and Out -of -State Village D of a portion of your travel expenses incurred in seeking employment with these entities /bodies did constitute an economic benefit to you, because they enabled you to participate in the job interviews without having to bear the full burden of such expenses. Having concluded that the aforesaid payments did constitute an economic benefit to you, the second issue to be addressed is the nature of the benefit for purposes of proper financial reporting under the Ethics Act. It is clear from the submitted facts that such payments were totally unrelated to your public position as the Township Manager for Township A. Therefore, Section 1105(b)(7) of the Ethics Act relating to the disclosure of paid /reimbursed expenses for transportation and lodging or hospitality received in connection with public office or employmentwould not apply as to these payments. Similarly, these payments would not constitute "income" under the definition of that term as set forth in the Ethics Act, because they were not received for future or past services. Therefore, Section 1105(b)(5) of the Ethics Act relating to the disclosure of sources of income would not apply as to these payments. However, we determine that these payments would constitute gifts reportable under Section 1105(b)(6) of the Ethics Act, because they were "received without consideration of equal or greater value." See, definition of "gift," 65 Pa.C.S. §1102. Your claim that the payments were in exchange for and "consideration of" your arranging your own travel arrangements, financing the travel expenses, and using your free time to accommodate the associated travel and interview is without merit. The prospective employers were under no obligation to make your travel arrangements, finance your travel expenses, or compensate you Confidential Opinion 03 -001 April 18, 2003 Page 5 in any way for using your "free time" to look for a job. There was no "consideration of equal or greater value" flowing to the above entities /bodies, and therefore, for purposes of the Ethics Act, their payments as to your travel expenses constituted gifts to you. As noted above, the amounts of the reimbursements that you received from these entities /bodies were as follows: from Entity B, [dollar amount]; from Out -of -State County C, [dollar amount]; and from Out -of -State Village D, [dollar amount]. As to each source, the reimbursement was in excess of the gift - reporting threshold ($250 or more in the aggregate). 65 Pa.C.S. § 1105(b)(6). Accordingly, you are advised that pursuant to Section 1105(b)(6) of the Ethics Act, you would be required to disclose in Block 11 of your Statement of Financial Interests for calendar year 2002 the name and address of Entity B, Out -of -State County C, and Out -of -State Village D as sources of gifts, as well as the amount and circumstances of each gift received from these sources. In order to have sufficient space to disclose all of the required information, you may attach additional sheets of paper, 8 Y2" X 11" in size, to the Statement of Financial Interests form. Finally, you are advised that any private understandings you may have had with the above entities /bodies regarding keeping the employment applications and interviews confidential would have no legal significance under the Ethics Act, which would require public disclosure of the above information. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. IV. CONCLUSION: Atownship manager is a public official /public employee subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., and the Regulations of the State Ethics Commission, 51 Pa. Code § 11.1 et seq. For purposes of financial disclosure under the Ethics Act, the payment by a prospective employer of all or a portion of a prospective employee's travel expenses incurred in attending an employment interview is a gift and is reportable under Section 1105(b)(6) of the Ethics Act to the extent the aggregate value of the gift(s) received from that source for the calendar year in question is $250 or more. The propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 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. Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair Confidential Opinion 03 -001 April 18, 2003 Page 6 Vice Chair John J. Bolger dissents.