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HomeMy WebLinkAbout04-523 ArnoldDr. Merrill S. Arnold Midd -West School District 568 East Main Street Middleburg, PA 17842 -1295 Dear Dr. Arnold: ADVICE OF COUNSEL March 23, 2004 04 -523 Re: Conflict; Public Official /Employee; School Director; Business With Which Associated; Contract With School District. This responds to your letters of February 24, 2004, and March 19, 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., presents any prohibition or restrictions upon two school directors or businesses with which they or immediate family members are associated, as to contracting with the school district. Facts: As Superintendent of the Midd -West School District ( "School District "), you s wan advisory on behalf of Michael A. Snook ( "Snook ") and Wyona (Onie) P. Lauver (Lauver "), two newly elected School Directors. You have submitted copies of the Statements of Financial Interests for both Snook and Lauver, as well as a copy of a letter dated October 27, 2003, from the School Board Secretary, which documents are incorporated herein by reference. In a private capacity, Snook is a salesman for Best Plumbing Spec. Inc., and Lauver is a part -time Secretary/Treasurer for Ivan Lauver & Son, Inc., a corporation which is owned by Lauver's spouse. Prior to Snook and Lauver's election to office, the School District made purchases from Best Plumbing Spec., Inc. and Ivan Lauver & Son, Inc. You ask what direction the School District and the School Directors should take with respect to the School District continuing to make purchases from Best Plumbing Spec., Inc. and Ivan Lauver & Son, Inc. now that Snook and Lauver have been elected to the School Board. 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 IDased upon the facts which the requestor has submitted. In issuing the advisory based upon the Arnold 04 -523 March 23, 2004 Page 2 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 liave 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. It is further initially noted that advisories only address the conduct of those individuals who have specifically given you their permission to submit an inquiry on their behalf. As to all others, you are considered a third party without legal standing. As School Directors, Snook and Lauver are public officials as that term is defined in the Ethics Act, and hence they 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. "Immediate family." A parent, spouse, child, brother or sister. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's Arnold 04 -523 March 23, 2004 Page 3 immediate family is a director, officer, owner, employee or has a financial interest. "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. 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(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. 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: Arnold 04 -523 March 23, 2004 Page 4 (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 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 your inquiry, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position- -for the Arnold 04 -523 March 23, 2004 Page 5 advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, Gorman, Order 1041, or private client(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. If the private employer or business with which the public official /public employee is associated or a private client would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, supra. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official/ public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 11030) set forth above. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In considering the above, Best Plumbing Spec., Inc., which employs Snook as a salesman, would be considered a business with which Snook is associated. In addition, Ivan P. Lauver & Sons, Inc., of which Lauver is Secretary /Treasurer, would be considered a business with which Lauver is associated. Ivan P. Lauver & Sons, Inc. would also be considered a business with which Lauver's spouse, as owner, is associated. Pursuant to Sections 1103(a) and 1103(j) of the Ethics Act, as School Directors, Snook and Lauver would have a conflict of interest and could not participate as to matters that would financially impact themselves, businesses with which they or immediate family members are associated, such as Best Plumbing Spec., Inc. and Ivan P. Lauver & Sons, Inc., or business client(s). Having established the above general principles, your specific inquiry shall now be addressed. As to what direction the School District and School Directors Snook and Lauver should take with respect to the School District continuing to make purchases from Best Plumbing Spec., Inc. and Ivan Lauver & Son, Inc., you are advised that your inquiry as it relates to the School District cannot be addressed within the statutory parameters of the Ethics Act, § 1107(10), (11), because the inquiry relates to the conduct of a governmental ody, over which the Commission has no jurisdiction. The Ethics Act regulates the conduct of public officials /public employees. As to Snook and Lauver, you are advised that the Ethics Act would not prohibit Best Plumbing Spec., Inc. or Ivan Lauver & Son, Inc. from contracting with the School District; however, any contract that either business would have with the School District, if over $500, would be subject to the open and public process restrictions of Section 1103(f) of the Ethics Act. Under Section 1103(f) Snook and Lauver, in their capacities as public officials, would be prohibited from having any supervisory or overall responsibility f the implementation or administration of the contract. In addition, pursuant to Section 1103(a) of the Ethics Act, Snook and Lauver, as School Directors, would have a conflict as to any contract between Best Plumbing Spec., Inc. or Ivan Lauver & Son, Inc. and the School District, and any votes to approve the payment of invoices submitted by Best Plumbing Spec., Inc. or Ivan Lauver & Son, Inc., under said contract. Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and Arnold 04 -523 March 23, 2004 Page 6 1103(j) are satisfied, a problem may 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 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 Snook and Lauver 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. Conclusion: As School Directors for the Midd -West School District ( "School District "), Michael A. Snook ( "Snook ") and Wyona (Onie) P. Lauver ( "Lauver ") are public Arnold 04 -523 March 23, 2004 Page 7 officials subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Best Plumbing Spec., Inc., which employs Snook as a salesman, would be considere a business with which Snook is associated. In addition, Ivan P. Lauver & Sons, Inc., of which Lauver is Secretary/Treasurer, would be considered a business with which Lauver is associated. Ivan P. Lauver & Sons, Inc. would also be considered a business with which Lauver's spouse, as owner, is associated. Pursuant to Sections 1103(a) and 1103(j) of the Ethics Act, as School Directors, Snook and Lauver would have a conflict of interest and could not participate as to matters that would financially impact themselves, Best Plumbing Spec., Inc., Ivan Lauver & Son, Inc., or business client(s). The Ethics Act would not prohibit Best Plumbing Spec., Inc. or Ivan Lauver & Son, Inc. from contracting with the School District; however, any contract that either business would have with the School District, if over $500, would be subject to the open and public process restrictions of Section 1103(f) of the Ethics Act. Under Section 1103(f), Snook and Lauver, in their capacities as public officials, would be prohibited from having any supervisory or overall responsibility for the implementation or administration of the contract. In addition, pursuant to Section 1103(a) of the Ethics Act, Snook and Lauver, as School Directors, would have a conflict as to any contract between Best Plumbing Spec., Inc. or Ivan Lauver & Son, Inc. and the School District, and any votes to approve the payment of invoices submitted by Best Plumbing Spec., Inc. or Ivan Lauver & Son, Inc., under said contract. Although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 1103(j) are satisfied, a problem may exist as to such contracting under the Public School Code of 1949 as amended, and therefore, it is suggested that Snook and Lauver seek legal advice as to its applicability. 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