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HomeMy WebLinkAbout04-520 OswaldRichard Oswald 107 Janet Street Beaver Falls, PA 15010 ADVICE OF COUNSEL March 10, 2004 04 -520 Re: Conflict; Public Official /Employee; School Director; Independent Contractor; Compensated Services at Extracurricular /Sporting Events; Activity Fund. Dear Mr. Oswald: This responds to your letters of January 28, 2004, and February 6, 2004, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.GS. § 1101 et seq., would impose any prohibition or restrictions upon a school director with regard to providing compensated services at extracurricular /sporting events if: (1) the services would be provided in the capacity of an independent contractor; and (2) the compensation would be paid from an athletic activity fund generated directly from gate receipts from school district sporting events. Facts: As a School Director for the Blackhawk School District ( "School District "), you seek an advisory from the State Ethics Commission based upon the following submitted facts. You were previously employed as a teacher for the School District. For over thirty years, you received training in selling and collecting tickets, running the scoreboard /clocks, and announcing at various athletic events at the varsity, junior varsity, ninth grade, and middle school levels. In the past, you were compensated for providing such services. Now that you have retired from teaching and have become a School Director, a question has arisen as to whether you may continue to receive compensation for providing such services at extracurricular /sporting events. You state that you would perform the services as an "independent contractor," but that there would be no contract. You state that you would deal directly with the Blackhawk Athletic Department. You would be paid upon the completion of each task, and your compensation would come from the Blackhawk Athletic Activity Fund (the "Fund. ") You describe the Fund as an "independent activity fund," yet you state that the fund is generated directly from gate receipts from various varsity level sporting events. Further, you state that the Fund is controlled by the Blackhawk Athletic Director and is Oswald, 04 -520 Marchl0, 2004 Page 2 subject to annual audits by the state. Two signatures are required on all checks issued from the Fund, and a quarterly financial report is provided to the School Board. Based upon the foregoing facts, you ask whether the proposed payment arrangement would be 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. §§ 1107(10), (11), advisories are issued to the requestor based upon the facts that the requestor has submitted. In issuing the advisory based upon the facts that the requestor has submitted, the 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 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. In the instant matter, some of the facts that have been submitted are inconsistent. You state that you seek to provide services as an independent contractor, yet you assert that there will be no contract. You describe the Fund as an "independent activity fund," yet you provide facts as to the monies in the Fund and control over the Fund that suggest it is a School District Fund. Given the inconsistencies in the facts that you have submitted, the analysis of your inquiry under the Ethics Act must include certain conditions detailed below. As a School Director, you are a public official subject to the provisions of the Ethics 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 pertaining to conflicts of interest 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 Oswald, 04 -520 Marchl0, 2004 Page 3 the performance of duties and responsibilities unique to a particular public office or position of public employment. "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 65 Pa.C.S. § 1102. 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. 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(f) of the Ethics Act provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. Oswald, 04 -520 Marchl0, 2004 Page 4 65 Pa.C.S. § 1103(f). Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. 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 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 Oswald, 04 -520 Marchl0, 2004 Page 5 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, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to your inquiry, it is noted that one of the essential elements for a violation of Section 1103(a) of the Ethics Act (pertaining to conflicts of interest) is a use of the authority of the public position or confidential information received by being in the public position. Under the facts that you have submitted, there is no indication that you would be taking any action as a School Director to secure the proposed work. Therefore, the fact that you would perform the proposed services would not, in and of itself, transgress Section 1103(a) of the Ethics Act. However, you would generally have a conflict of interest in your capacity as a School Director in matters pertaining to the Blackhawk Athletic Director, who per the submitted facts, would be in a position to determine to what extent you would provide the proposed compensated services. The basis for the conflict would be that as a School Director, you would exercise authority over the Blackhawk Athletic Director as a School District employee, while the Blackhawk Athletic Director would exercise authority over you as to the proposed services. For the reasons enunciated by the Commission in Bassi, Opinion 86- 007 -R, Woodrinq, Opinion 90 -001, and Elisco, Opinion 00 -003, such a reciprocal arrangement would generally result in a conflict of interest for you under Section 1103(a) of the Ethics Act in matters pertaining to the Blackhawk Athletic Director. Additionally, you would have a conflict of interest in your capacity as a School Director in matters pertaining to your provision of the proposed services, such as any approval by the School Board of payments issued to you. In each instance of a conflict of interest, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The abstention requirement is not limited merely to voting, but extends to any use of authority of office. In Juliante, Order 809, the Commission recognized that the use of authority of office as defined in the Ethics Act includes, for example, discussing, conferring with others, and lobbying for a particular result. With respect to Section 1103(f) of the Ethics Act, you have asserted that there would be no contract for your proposed services, and that the Fund from which you would be paid is an "independent activity fund." Nevertheless, it would appear from the submitted facts that contracting would occur, even if such contract(s) would not be in writing, and that you would be paid with School District funds. Therefore, you are advised that Section 1103(f) of the Ethics Act would have to be observed if applicable. Finally, you are cautioned that although the proposed provision of services would not be prohibited by the Ethics Act conditioned upon your conformity with the requirements of Sections 1103(a) and 11030), and 1103(f) to the extent applicable, a problem could exist as to such contracting under the Public School Code of 1949 as amended ( "Public School Code "). It is administratively noted that the Public School Code, provides in pertinent part: § 3 - 324. Not to be employed by or do business with district; exceptions (a) No school director shall, during the term for which he was elected or appointed, as a private person engaged [sic] in any business transaction with the school district in Oswald, 04 -520 Marchl0, 2004 Page 6 which he is elected or appointed, be employed in any capacity by the school district in which he is elected or appointed, or receive from such school district any pay for services rendered to the district except as provided in this act: Provided, That one who has served as a school director for two consecutive terms, of six years each, may be elected to the position of attorney or solicitor for the board of which he was a member by the unanimous vote of all the other members of the board, and, after resigning his office as school director, shall be entitled to receive such pay for his services as solicitor as the board of school directors may determine: Provided, however, That a school director may be appointed to the position of secretary to the board of a school district of the second class, of which he was a member during the term for which he was elected or appointed upon the unanimous consent of all the other members of the board after resigning his office as school director, and he shall be entitled to receive such pay for his services as secretary as the board of school directors shall determine: And provided further, That one who has served as a school director may, after resigning from office as a school director, be elected to the position of teacher by the board of which he was a member by a vote of at least two - thirds of all other members of the board and shall be entitled to receive such pay for his services as a teacher as the board of school directors may lawfully determine. (c) It shall not be a violation of this section for a school district to contract for the purchase of goods or services from a business with which a school director is associated to the extent permitted by and in compliance with 65 Pa.C.S. Ch. 11 (relating to ethics standards and financial disclosure). 24 P.S. § 3- 324(a), (c). The State Ethics Commission does not have the statutory jurisdiction to interpret the Public School Code. Therefore, it is suggested that you seek legal advice as to its applicability. 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 Public School Code. Conclusion: As a School Director for the Blackhawk School District ( "School District "), 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. Your proposed provision of compensated services at extracurricular /sporting events where: (1) the services would be provided in the capacity of an independent contractor; and (2) the compensation would be paid from an athletic activity fund generated directly from gate receipts from School District sporting events, would not be prohibited by the Ethics Act conditioned upon your conformity with the requirements of Sections 1103(a) and 1103(1), and 1103(f) to the extent applicable. You would generally have a conflict of interest in your capacity as a School Director in matters pertaining to the Blackhawk Oswald, 04 -520 Marchl0, 2004 Page 7 Athletic Director, who would be in a position to determine to what extent you would provide the proposed compensated services. You would have a conflict of interest in your capacity as a School Director in matters pertaining to your provision of the proposed services, such as any approval by the School Board of payments issued to you. In each instance of a conflict of interest, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Since a problem could exist as to such contracting under the Public School Code of 1949 as amended ( "Public School Code "), 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. 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