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HomeMy WebLinkAbout04-503 BagnoniMario S. Bagnoni City Councilman The City of Erie 626 State Street, Room 104 Erie, PA 16501 -1128 ADVICE OF COUNSEL January 22, 2004 04 -503 Re: Conflict; Public Official /Employee; Third Class City; Council Member; Salary; Insurance Benefits; Private Pecuniary Benefit /Detriment; Monetary Payment in Lieu of Insurance Benefits. Dear Mr. Bagnoni: This responds to your letter of December 17, 2003, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., presents any prohibition or restrictions upon a city council member as to receiving a monetary payment in lieu of city -paid health insurance coverage. Facts: You are a Council Member for the City of Erie ( "City "). You have been o fer the option of "opting out" of the health insurance coverage offered by the City. You state that instead of receiving coverage through the City, you would receive an additional $2,500 per year. You state that your salary, which is set by ordinance, would be increased by the $2,500 you would receive in lieu of City paid health insurance coverage. You note that under the Third Class City Code, the salaries of elected officials cannot be increased or decreased during their term of office. You ask whether such an arrangement is permissible under 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. §§ 1'107(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 Bagnoni 04 -504 January 22, 2004 Page 2 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 a City Council Member, 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. "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. 65 Pa.C.S. § 1102. 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 Bagnoni 04 -504 January 22, 2004 Page 3 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(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. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited 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. Although the State Ethics Commission does not have the statutory jurisdiction to interpret laws other than the Ethics Act, such other laws become relevant when it is necessary to determine whether a public official /employee may receive a pecuniary benefit under the Ethics Act. In such cases, other laws must be considered to determine whether the pecuniary benefit is permitted under the Ethics Act as authorized in law or is prohibited as a private pecuniary benefit without authorization in law. A financial gain to a public official /public employee that is other than compensation provided for by law is a private pecuniary benefit. Thompson, Opinion 99 -005, at 3 -4. In the instant matter, certain provisions of the Third Class City Code must be reviewed in order to properly apply the Ethics Act to your inquiry. Section 36016 of the Third Class City Code provides as follows: § 36016. Salaries Bagnoni 04 -504 January 22, 2004 Page 4 Councilmen shall receive for their services during their term of service annual salaries, to be fixed by ordinance, payable in monthly or semimonthly instalments. Councils may, by the ordinance fixing said salaries, provide for the assessment and retention therefrom of reasonable fines for absences from regular or special meetings of council or councilmanic committees... The compensation to be received by councilmen shall not be increased or diminished after their election; but succeeding councils may change all compensation, said change to take effect as to councilmen taking office at least six months after the passage of the ordinance providing for such change. 53 P.S. § 36016. Section 37403 of the Third Class City Code provides in pertinent part as follows: § 37403. Specific powers In addition to other powers granted by this act, the council of each city shall have power, by ordinance: 53. Insurance. - .. . To make contracts of insurance with any insurance company, or nonprofit hospitalization corporation, or nonprofit medical service corporation, authorized to transact insurance business within the Commonwealth, insuring its elected or appointed officers, officials and employes, or any class or classes thereof, or their dependents, under a policy or policies of group insurance covering life, health, hospitalization, medical service, or accident insurance, and to contract with any such company granting annuities or pensions for the pensioning of such persons; and, for such purposes, to agree to pay part or all of the premiums or charges for carrying such contracts, and to appropriate out of its treasury any money necessary to pay such premiums or charges, or portions thereof. All contracts procured hereunder shall conform and be subject to all the provisions of any existing or future laws concerning group insurance and group annuity contracts. The proper officer, agency, board or commission is hereby authorized, enabled and permitted to deduct from the officer's or employe's pay, salary or compensation, such part of the premium as is payable by the officer or employe and as may be so authorized by the officer or employe in writing. 53 P.S. § 37403. Per the foregoing provisions of the Third Class City Code, council members receive an annual salary to be fixed by ordinance, which salary may not be increased or diminished after their election. 53 P.S. § 36016. Further, city council is authorized to make contracts for group insurance covering life, health, hospitalization, medical, or accident insurance covering elected or appointed officers, officials and employees, or their dependents. 53 P.S. § 37403. Therefore, to the extent City Council has acted to authorize City -paid health insurance coverage for you, as a Council Member, you may Bagnoni 04 -504 January 22, 2004 Page 5 receive such coverage at the City's expense without transgressing Section 1103(a) of the Ethics Act. Your proposed action of "opting out" of your City -paid health insurance benefits would result in a financial detriment rather than a private pecuniary benefit to you. Therefore, you are advised that Section 1103(a) of the Ethics Act would not prohibit you from "opting out" of your City -paid health insurance benefits conditioned upon the assumption that such action would not result in any private pecuniary benefit prohibited under Section 1103(a) of the Ethics Act. See, Chesnutt, Advice 96 -588; Borqo, Order 957; Eisaman, Order 958; and Zentner, Order 963. As for whether you may receive an additional $2,500 in lieu of health insurance coverage, only general guidance may be given under the submitted facts. Assuming that government -paid benefits are lawfully available to a given public official /public employee, the propriety of such individual foregoing the benefits in return for some monetary payment depends upon whether there is a specific authorization in law permitting a monetary payment in lieu of benefits. Thompson, supra, at 5. It b are authorized in law without a specific option to forego the benefits for a monetary payment, then the public official /public employee may not obtain such a pecuniary benefit. Id.; See also, Bucho, Advice of Counsel, 02 -626. Thus, even if you as a City Council Member are entitled to receive health insurance benefits at the City's expense, you may not receive a monetary payment in lieu thereof under the Ethics Act unless there is a specific authorization in law permitting you to exercise an option to forego such benefits tor a monetary payment. Because the submitted facts do not indicate whether there is a specific authorization in law (such as a City ordinance) permitting you to forego your City -paid health insurance benefits for a monetary payment, this advisory must necessarily be limited to providing the above general guidance as to this aspect of your inquiry. It is parenthetically noted that even if such an ordinance would exist, the receipt of $2,500 could be problematic given that Section 36016 of the Third Class City Code provides that "the compensation to be received by councilmen shall not be increased or diminished after their election." 53 P.S. § 36016. Because it is beyond the jurisdiction of the State Ethics Commission to interpret the Third Class City Code, it is suggested that you seek legal advice in that regard. 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. Conclusion: As a Council Member for the City of Erie ("City"), you 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. Section 1103(a) of the Ethics Act would not prohibit you from "opting out" of your City -paid health insurance benefits conditioned upon the assumption that such action would not result in any private pecuniary benefit prohibited under Section 1103(a) of the Ethics Act. Section 1103(a) of the Ethics Act would prohibit you from receiving a monetary payment in lieu of your City -paid health insurance benefits unless there is a specific authorization in law permitting you to exercise an option to forego such benefits for a monetary payment. Even if such an arrangement were authorized in law, the provision in the Third Class City Code which provides that "the compensation to be received by councilmen shall not be increased or diminished after their election" may prove problematic, and therefore, it is suggested that you seek legal advice in that regard. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Bagnoni 04 -504 January 22, 2004 Page 6 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