HomeMy WebLinkAbout03-564 SundheimRichard N. Sundheim, CPA, Controller
Office of the Controller
County of Montgomery Court House
P.O. Box 311
Norristown, PA 19404 -0311
ADVICE OF COUNSEL
July 1, 2003
03 -564
Re: Conflict; Public Official /Employee; County; Controller; Retirement Board Member;
Pension; Vested; Benefits Increase; Exclusion; Class /Subclass.
Dear Mr. Sundheim:
This responds to your letter of June 2, 2003, by which you requested advice from
the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa. .S. § 1101 et seq., presents any prohibition or restrictions upon a county controller
who is a member of the county retirement board in participating to increase pension
benefits when he, as a vested member, will receive an increase in his own pension.
Facts: You, as the elected Controller in Montgomery County, serve with four other
elected officials (the Treasurer and three Commissioners) as a member of the County
Retirement Board. One of the responsibilities of the Retirement Board is to determine
within legal limits the benefits to be paid to retired county employees. Elected officials
such as yourself, if vested, qualify when such benefits are increased. You state that if
you vote to increase benefits, you will be voting to increase your own pension.
Montgomery County has approximately 3,000 current employees and 1,200
retirees. While there are enough non - vested members on the Retirement Board who
will not become vested unless they are re- elected, you believe that abstention by a
vested member could be a bad precedent in passing a resolution. It is possible that all
members of the Retirement Board could be vested, and if so, you conclude that the
Board might be prohibited from approving increased benefits for all other eligible
employees. Approval for some employees but not others — such as the Retirement
Board — is not an option under the law in your view.
You request an advisory as to whether voting on this issue, that you expect to
come before the Board, would be a violation of the conflict of interest provision of the
Ethics Act.
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
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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
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 elected Controller in Montgomery County and member of the County
Retirement Board, you are a public official as that term is defined in the Ethics Act, and
hence you are subject to the provisions of that Act.
Section 1103(a) of the Ethics Act provides:
§ 1103. Restricted activities
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
65 Pa.C.S. § 1103(a).
The following terms are defined in the Ethics Act 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
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.
In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no
person shall offer to a public official /employee anything of monetary value and no public
official /employee shall solicit or accept anything of monetary value based upon the
understanding that the vote, official action, or judgment of the public official /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.
Section 1103(j) of the Ethics Act provides as follows:
§ 1103. Restricted activities
(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
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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(j).
In each instance of a conflict, Section 1103(j) requires the public
official /employee to abstain and to publicly disclose the abstention and reasons for
same, both orally and by filing a written memorandum to that effect with the person
recording the minutes or supervisor.
In the event that the required abstention results 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.
Section 1103(a) of the Ethics Act prohibits a public official /public employee from
using the authority of public office /employment or confidential information received by
holding such a public position for the private pecuniary benefit of the public
official /public employee himself, any member of his immediate family, or a business with
which he or a member of his immediate family is associated.
As to the facts you have submitted, your participation in actions of the retirement
board to increase pensions, including your own, is a per se conflict. Under Section
1103(a) of the Ethics Act, you would use the authority of office by your participation in
actions of the Retirement Board. Further, such action would result in private pecuniary
benefits consisting of the increased pension benefits. Lastly, that pecuniary benefit
would inure to you individually as a vested member of the pension plan. Hence, all of
the elements of a conflict would exist.
However, the statutory definition of "conflict" or "conflict of interest" includes two
exclusions, hereinafter referred to as the "de minimis" exclusion and the "class /subclass
exclusion."
The de minimis exclusion precludes a finding of conflict of interest as to an action
having a de minimis (insignificant) economic impact. Thus, when a matter that would
otherwise constitute a conflict of interest under the Ethics Act would have an
insignificant economic impact upon a public official, a member of his immediate family,
or a business with which he or a member of his immediate family is associated, a
conflict would not exist and Sections 1103(a) and 1103( of the Ethics Act would not
restrict participation in such matter. See, Schweinsburq Order 900. In that your inquiry
involves participation in actions of the Retirement Board with regard to increased
pension benefits to county personnel, including yourself, such action would not have a
de minimis economic impact, and therefore, this exclusion would not apply.
In order for the class /subclass exclusion to apply, two criteria must be met: (1)
the affected public official /public employee, immediate family member, or business with
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which the public official /public employee or immediate family member is associated
must be a member of a class consisting of the general public or a true subclass
consisting of more than one member; and (2) the public official /public employee,
immediate family member, or business with which the public official /public employee or
immediate family member is associated must be affected "to the same degree" as the
other members of the class /subclass. 65 Pa.C.S. § 1102; see, Graham, Opinion 95 -002
(citing Van Rensler, Opinion 90 -017); Rubenstein, Opinion 01 -007. The first criterion of
the exclusion is satisfied where the members of the proposed subclass are similarly
situated as the result of relevant shared characteristics. The second criterion of the
exclusion is satisfied where the individual /business in question and the other members
of the class /subclass are reasonably affected to the same degree by the proposed
action. Kablack, Opinion 02 -003.
In considering the first criterion, it would appear that the correct identification of
the class /subclass to which you belong is the class /subclass consisting of the county
employees who are vested in the pension plan. You have not indicated whether there
are different pension plans or classes within the same pension plan, that is, whether all
vested county employees are in the same plan or whether there are different plans,
such as, one for elected officials, one for employees, or for specialized services. For
purposes of this advice, it will be factually assumed that there is just one pension plan
for all county personnel.
The submitted facts, however, do not disclose any facts as to the amount of the
pension increase or the possibility of any variation in increases among the vested
pension members. Therefore, a determination cannot be made as to whether you
would be reasonably affected to the same degree as one or more other members of the
class /subclass. Thus, no factual information has been presented to determine whether
there is one or more vested members in the pension plan that would receive the
approximately same amount of pension increase as you. When a factual insufficiency
exists as to the impact of proposed action as to members of the class /subclass, the
advisory must necessarily be limited to providing general guidance.
If, as a result of your proposed action, you would be affected to the same degree
(the approximate same amount of increased pension benefits) as one or more other
members of the class /subclass, the class /subclass exclusion would apply and you would
not have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in
actions of the Retirement Board with regard to the increased pension benefits.
If, as a result of your proposed action, you would not be affected to the same
degree as one or more other members of the class /subclass, the class /subclass
exclusion would not apply and you would have a conflict of interest under Section
1103(a) of the Ethics Act as to participating in actions of the Retirement Board. In any
instance of a conflict, you would be required to abstain from participating and observe
the disclosure requirements of Section 1103(j) of the Ethics Act.
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. Specifically not addressed herein is the applicability of
the County Code.
Conclusion: As an elected Controller in Montgomery County and member of the
County's Retirement Board, you area ublic official subject to the provisions of the
Public Official and Employee Ethics Act ("Ethics Act "), 65 Pa.C.S. § 1101 et seq. Your
participation in actions of the retirement board to increase pensions, including your own,
is a per se conflict. However, the statutory definition of "conflict" or "conflict of interest"
includes two exclusions, hereinafter referred to as the "de minimis" exclusion and the
"class /subclass exclusion." The de minimis exclusion would not apply.
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In order for the class /subclass exclusion to apply, two criteria must be met: (1) the
affected public official /public employee, immediate family member, or business with which
the public official /public employee or immediate family member is associated must be a
member of a class consisting of the general public or a true subclass consisting of more
than one member; and (2) the public official /public employee, immediate family member,
or business with which the public official /public employee or immediate family member is
associated must be affected "to the same degree" as the other members of the
class /subclass. In considering the first criterion, it would appear that the correct
identification of the class /subclass to which you belong is the class /subclass consisting of
the county employees who are vested in the pension plan. The submitted facts, however,
do not disclose any facts as to the amount of the pension increase or the possibility of any
variation in increase among the vested pension members.
If, as a result of your proposed action, you would be affected to the same degree
(the approximate same amount of increased pension benefit) as one or more other
members of the class /subclass, the class /subclass exclusion would apply and you
would not have a conflict of interest under Section 1103(a) of the Ethics Act as to
participating in actions of the Retirement Board with regard to the increased pension
benefits. If, as a result of your proposed action, you would not be affected to the same
degree as one or more other members of the class /subclass, the class /subclass
exclusion would not apply and you would have a conflict of interest under Section
1103(a) of the Ethics Act as to participating in actions of the Retirement Board. In any
instance of a conflict, you would be required to abstain from participating and observe
the disclosure requirements of Section 1103(j) of 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